Karen's Track thru Gulf Infrastructure
Should motorists be worried as Tropical Storm Karen heads for a U.S. land fall somewhere between Louisiana and the Florida Panhandle?
No, say GasBuddy analysts, who observe that almost all tropical systems destroy some near term demand when making U.S. land fall, but add that few storms render significant damage to the oil production or refining infrastructure.
Most of the U.S. Gulf Coast refining capacity is well west of probability cones for land fall. In Texas, for example, clusters of refining include 663,000 barrels per day of output near Corpus Christi; nearly 2.5-million barrels per day of Houston/Texas City/Baytown production; and about 1.5-million barrels per day of output in the Beaumont/Port Arthur Texas area. In Louisiana, there is approximately 770,000 barrels per day of U.S. refining capacity near Lake Charles and another 2.5-million barrels per day of production in the New Orleans/Baton Rouge area on the lower Mississippi.
Tropical Storm Karen’s path takes it closer to the 445,000 b/d of capacity that two coastal refineries in Mississippi and Alabama contribute to U.S. supply.
Offshore oil production in the Gulf of Mexico amounts to about 1.2-million barrels per day, or about 15% of total U.S. output. None of the evacuations of offshore platforms should have a meaningful impact on crude availability.
Ironically, the states most like to be impacted by the tropical system are those that feature some of the cheapest motor fuel prices in the country. Alabama, Georgia, Louisiana, Mississippi, and Georgia all find plentiful or occasional sub-$3 gal prices, putting prices well beneath where they were a year ago.
GasBuddy Chief Oil Analyst Tom Kloza also observes that autumn storm impacts are much less threatening than tropical land falls in the summer. “Gasoline is a difficult product to manufacture between June and September 15,” he noted. “But the change in fall specifications makes it more plentiful from U.S. and foreign destinations.”
GasBuddy expects that motor fuel prices will continue to drift lower this weekend, despite the storm track. Hurricane season could still impact fuel prices, but only if major storms target the refinery clusters that lie between Corpus Christi and New Orleans.