The combination of record-breaking heat and looming hurricanes is set to challenge U.S. refiners in the weeks ahead, potentially leading to highly volatile fuel prices during the peak travel season, analysts warned.
The annual Atlantic hurricane season, running from June through November, poses a significant threat to U.S. refineries, especially those along the vulnerable Gulf Coast. This region hosts over half of the country’s refining capacity, totaling more than 18 million barrels per day, making it highly susceptible to tropical storms. As the largest fuel market globally, disruptions here can reverberate through global energy markets.
Forecasters predict an active hurricane season this year, anticipating up to seven major hurricanes—double the annual average of three with wind speeds exceeding 111 miles per hour.
Recent preparations for Tropical Storm Beryl underscore the readiness and caution needed. Citgo Petroleum Corp reduced production at its 165,000 barrel-per-day Corpus Christi refinery ahead of Beryl’s anticipated impact on the Texas Coast. Major Texas ports also ceased operations and vessel traffic in anticipation of the storm’s arrival, expected to regain hurricane status by early Monday.
Neil Crosby, crude market analyst at Sparta Commodities, highlighted the potential for disruption as Beryl’s intensity and early season arrival indicate a turbulent season ahead.
“Hurricanes remain a major unpredictable factor affecting gasoline prices,” noted GasBuddy analyst Patrick De Haan, citing Beryl as a stark reminder. Evacuation orders ahead of storms can increase stockpiling and drive up fuel demand, resulting in higher prices for gasoline, diesel, and other refined products.
The U.S. Energy Information Administration (EIA) warned that a major storm hitting the Gulf Coast could disrupt up to a million barrels per day of fuel supply, leading to prolonged outages or even permanent closures of refineries. A similar impact on crude supply from the Gulf of Mexico, which accounts for around 14% of U.S. crude output, could exacerbate market volatility.
In 2021, Hurricane Ida prompted U.S. oil and gas companies to suspend over 1.7 million barrels per day of oil production. The EIA estimates that outages totaling 1.5 million barrels per day of crude production and refining capacity can drive gasoline prices up by 25 to 30 cents.
Aside from hurricanes, refineries also face challenges from scorching temperatures, compounding their operational difficulties this year.
