Hurricane Ida Brings Pressure to Oil and Gas Prices in Montana
With so many of the nation’s refineries in the Gulf, Hurricane Ida has forced closures and evacuations which have affected oil prices and subsequently gas prices, as well.
Analyst Patrick DeHaan of Gas Buddy explained its effect on gas prices in Montana.
“For now, call it about 12% of the nation's refining capacity is offline, though that number is starting to improve,” said DeHaan. “That's a big enough percent of that gasoline supply is being impacted. In fact, really since Friday when these refineries shut down ahead of Hurricane Ida have we seen the hit to the gasoline supply, and that has caused gasoline futures to go up slightly.”
DeHaan said the effects in Montana won’t be as severe as other parts of the country.
“It's for that reason that prices in Montana appear to have edged higher a little bit overnight,” he said. “Prices may drift a little higher by a few cents a gallon, but so long as these refineries don't remain down for a significant amount of time, I would think that the impact to Montana's average prices would be relatively small, measured more in cents than nickels or dimes.”
DeHaan said the effects of the hurricane are already beginning to fade.
“I would think that once power restoration happens across the refineries in Louisiana, things should start to improve there, and that would help put downward pressure on prices,” he said. “Demand will also begin cooling. It's already gone down for two straight weeks. That will help provide some breathing room, and then by mid September, we switch back to cheaper winter gasoline. So I would think that by late September, if not earlier, prices should begin declining more notably as they have prior to Ida's arrival.”
DeHaan said U.S. oil production has been on the increase.
“U.S. oil production did increase in today's report from the Energy Information Administration,” he said. “It is now up quite nicely from where it was a year ago, at about 11 point 5 million barrels a day. However, in the same government report out this morning, it indicated that the US was consuming some 23 million barrels a day of oil products. At the peak, prior to COVID, US oil production amounted to some 13 million barrels a day, so we're not quite back to pre COVID output. And that is why oil prices generally remain at some of the higher levels compared to they were before the pandemic.”
The highest gas prices are $4.39 in California, while the lowest are in Mississippi at $2.74. Prices in Missoula average at about $3.30 per gallon.