Many disruption scenarios can occur when a hurricane hits the U.S. directly. Whether it hits the Gulf Coast refineries and off shore oil rigs, New York Harbor refineries or the Carolina’s where there isn’t an energy infrastructure presence but a high density of population. I had the pleasure to meet with one of our experts, Mike Dombroski, Commercial Sales Account Manager to discuss in more detail how to better prepare and what could happen to fuel prices if you’re not ready.
In 2017 Hurricane Harvey hit, Mike was part of the sales team that preemptively laid out some options for his customers making them aware of the high probability that Hurricane Harvey would hit Houston and what impact it was going to have on their supply options. Mike was able to supply risk management solutions where they could lock in prices before they soared in the weeks that came after.
With hurricane season underway how will it affect the oil industry?
“It all depends on whether the hurricane will hit the East Coast or Gulf Coast. When we think about hurricanes we either see a supply disruption or demand disruption. If refineries or pipeline infrastructure flood and have to be shut down, this can cause supply disruption. If we just see localized flooding, but the petroleum infrastructure can still operate, then we just have demand disruption and people stop traveling for a few days.”
What are some things to consider when Hurricane Florence hits the East Coast?
“Hurricane Florence is predicted to hit the Carolina's on Thursday of this week. We will see a huge run on gasoline prior to it making landfall, from today until then. In the coming days we will keep an eye on what strength/ category it is as it hits the coast because the infrastructure and electrical grids can be affected along with pipelines and petroleum terminals. This can cause supply disruption throughout the areas.
If the storm hits and only causes regional flooding from rain but pipelines and terminals continue to run, then we just have demand disruption.
After the hurricane hits we will see a run on diesel fuel as demand for cleanup in those areas experiences a spike.”
With the Eastern Seaboard playing an important role in the U.S. import trade, how will Norfolk, Savannah and Charleston be affected by hurricane Florence?
“Since about 40% of refined products come from the pipelines shipping product from the Gulf Coast north to the
Mid-Atlantic and Northeast, the disruption from the barge-fed terminals will not be as bad as a pipeline disruption.”
How can we help our customers prepare for the hurricane season?
“Talking to them every day while these storms are active so we can get our customer’s fuel when they need it at the best possible price.”
The Energy Information Administration (EIA), supplies a population density map that is able to provide energy infrastructure, resources, storm tracks, and flood hazard areas. Population density data is able to allow users to analyze how various energy components interact with and relate to centers of population.
Hurricane Florence is expected to hit the Eastern Seaboard as a category 4 storm with maximum winds of 130-156 miles per hour. It’s expected to pick up speed between Bermuda and the Bahamas on Tuesday and Wednesday. Hurricane winds could hit the Carolina's by Wednesday night with landfall likely in South and North Carolina on Thursday.