Gas prices across the United States have been rising in the aftermath of Hurricane Isaac, due to a shortfall in supply as refineries shut down to prevent damage from the storm.
The federal Energy Information Administration reported that the onset of the hurricane caused the protective shutdown of refineries operated by Exxon Mobil Corporation (NYSE:XOM), Valero Energy Corporation (NYSE:VLO), Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B), Phillips 66 (NYSE:PSX), and Marathon Oil Corporation (NYSE:MRO).
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Supplies from a total of eight refineries were therefore cut off – that’s about 2 million barrels of oil per day, and an eighth of the U.S. refining capacity. Though no long term damage can be expected, refineries shut down to protect their functioning – this is because they need vast amounts of power to generate steam to crack crude oil into various petroleum products, and in the event of an unforeseen power outage, the partially cooked oil in pipes is difficult to clean out and can delay the re-opening of the refinery for several weeks.
The federal Bureau of Safety and Environmental Enforcement reported that over 550 oil rigs and platforms in the Gulf had to be evacuated as a safety precaution. This resulted in massive cuts in the area’s production of oil and natural gas.
Yesterday gas prices jumped by almost 5 cents a gallon, and today irate motorists faced another hike of 2.2 cents a gallon. According to motoring association AAA, the national average gas is now $3.826 a gallon, the highest level witnessed since April. However regional imbalances exist, and some states were hit harder than others. These were states in the southern and mid-western zones that receive their gas via pipelines from coastal refineries – Indiana, Illinois, Kentucky, and Ohio.
However, experts hasten to point out that the spike in gas prices could be a temporary phenomenon, because the storm has already been classified instead as only a tropical storm, and those refineries could be back on line sooner, rather than later. However, some motorists have already anticipated this, and are buying only a few gallons of gas instead of a full tank.