Ida idles oil production on busy gulf coast
HOUSTON - Oil prices rose slightly in the hours after the energy industry found itself right in the path of Hurricane Ida. Offshore drilling and onshore processing were both affected by the storm.
Ida passed over water dotted with thousands of oil and gas platforms in the Gulf of Mexico. 96% of production was shut down and hundreds of them were evacuated.
MORE: Hurricane Ida leaves trail of damage across Louisiana
Assessing damage will take some time. Staff needs to fly back on helicopters that take off from areas that were hit by the storm.
"In order to get the personnel back to the launching areas, the roads need to be cleared of trees and downed power lines so this process is going to take several days in order to just get the staff out there to assess the damage," says Houston energy analyst Andy Lipow.
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Damage onshore could have more lasting effects. Nine refineries, between Baton Rouge and New Orleans, produce about 50 million gallons of fuel, each day. Almost all of them shut down for the storm and more than a million homes and businesses were left without power.
"They're all going to be subject to Entergy, the local utility, restoring power," says Lipow, "According to Entergy, the utility sustained some catastrophic damage."
For consumers, the end of the line is at the gas pump. Encouraging news for Houston is that fuel does not come from Louisiana, which sends its product to the Southeast and Mid-Atlantic states. Short-term shortages could be possible there until production ramps-up, and pipelines that were shut for safety, start sending fuel again.
It could take some time. When Hurricane Laura hit Lake Charles, LA, in 2020, affected refineries were shut down for eight to 10 weeks. On top of that, gasoline inventories are the lowest they've been since 2015, and down 6% from a year ago.
Andy Lipow suggests the government authorize easier-to-produce 'winter-grade' fuel, and easing restrictions on shipping fuel from one part of the country to another, as options to ease any shortages that might appear.