Beryl Marks Beginning of Stormy Weather for Gas Prices

Key Takeaways

• Heat and hurricanes may offer double trouble for summer gas prices
• Forecasters predict more storms and record heat for the Gulf Coast
• Alex Hodes, Energy Analyst at StoneX says refineries are better prepared to weather the season

Reuters reported that despite forecasts of extreme heat and increased hurricane activity, Alex Hodes, Energy Analyst at StoneX said that thanks to recently completed upgrades during maintenance season, Gulf Coast refineries should be better prepared to handle the coming extreme summer weather.

Slow demand in recent months has helped refineries build fuel stockpiles, which should buffer against outages, still summer travel plans may be hampered by higher gas prices, driven by record heat and the beginning of the hurricane season in the Atlantic. Hurricanes are a seasonal threat to U.S. oil refineries located on the Gulf Coast, putting the largest fuel market in the world at risk of summer disruption.

Major storm disruption along the Gulf Coast has the potential to cut up to a million barrels a day of fuel supply, leading to outages or closures. Forecasters are predicting as many as seven major hurricanes in coming months, double the annual average.

Citgo Petroleum Corp recently cut output at its Corpus Christi refinery in preparation for Hurricane Beryl as the storm approached land. The largest ports in Texas also shut down operations and were closed to vessel traffic.

After being hit by Hurricane Ida in 2021, more than 1.7 million barrels of oil output were suspended by U.S. gas and oil suppliers. Outages of 1.5 million bpd (barrels per day) are significant enough to have a negative impact on gasoline prices, according to the U.S. Energy Information Administration.

Hurricanes are only part of the summer weather worries for refineries and gas prices. This year’s brutal record heat is also a concern.

The latest U.S. monthly temperature forecast indicates above average temperatures in large parts of the U.S. in July. Temperatures that rise into the triple-digits could lead to mechanical malfunctions and capacity reduction.

An estimated 500,000 bpd reduction in Gulf Coast products output was blamed on extreme heat last year.

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