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How Hurricane Season Could Impact Gas Prices

Across the country, Americans are breathing a sigh of relief at the sight of falling gas prices. The national average price of regular gas sits at $3.84, down from $4.22 last month according to the AAA. If recent predictions of a highly-active hurricane season come to fruition, relief from pain at the pump may be short-lived.

>>>READ: Five Ways to Help Lower Gas Prices

Analysts at Colorado State University are projecting that the Atlantic Ocean might see more hurricane activity than usual. The researchers increased their prediction to 10 hurricanes up from 9 in April. They also predict that the number of major storms (Category 3 and higher) will be 5. The annual average is 3.2. 

The difference between a Category 3 and a Category 5 hurricane can be substantial. Category 3 hurricanes often involve significant damage to homes, apartments, uprooted trees, and lead to power outages. Category 5 hurricanes have winds that are 157 MPH or higher and cause catastrophic damage to buildings and mobile homes.

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These startling numbers caused energy analysts at GasBuddy to put out a notice that energy consumers might be in for another sharp rise in prices at the pumps. Fuel demand generally rises at the beginning of hurricane season as Americans travel more over the summer months, but a particularly intense hurricane season in the Atlantic Basin could push prices higher than usual by affecting energy infrastructure. 

Patrick DeHaan, Head of Petroleum Analysis for GasBuddy, explains how hurricanes impact the price at the pump. 

“We tend to see major hurricanes have a profound impact on gasoline prices, specifically large storms over Category 3 that targeted an area between New Orleans and Houston,” DeHaan said in an interview with Fox Weather, “That’s where we see dozens of refineries, of course hundreds of off-shore oil platforms in that vicinity. And so any major storm in the Gulf of Mexico can be bad news, especially now with the decline in refining capacity that we’ve seen in the last few years. We essentially need every barrel of capacity that we can get.”

According to DeHaan, when major hurricanes hit, non-essential personnel are evacuated from offshore oil platforms and the refineries have to potentially shut down until the storm passes. These shutdowns suppress the capacity to meet fuel demands which in turn causes prices to rise. 

>>>READ: The Truth About Extreme Weather

In 2017, Hurricane Harvey caused gas prices to spike to a two-year high.

Harvey caused gas prices to rise by over 20 cents within a two-week period and refineries to shut down throughout the Gulf Coast. Analysts fear that an especially strong hurricane season could end up replicating this effect. 

Oil Price Information Service (OPIS) energy analyst Tom Kloza told Fox Business that things could get disastrous if hurricane season ramps up. 

“I think for gasoline, we go back above $5 and apocalyptic numbers come into play with hurricanes,” Kloza said. “The thing that people have to watch and is really insidious for inflation are the values for diesel and jet fuel. Stocks of those fuels are not building, they’re tight internationally and that’s where we’re going to have to pay the piper in the last 100 days of the year.”

Americans are understandably relieved at the sight of declining gas prices. But that relief might soon turn to greater frustration if hurricane season is as bad as predicted. This should serve as a stark reminder that America is not completely out of the woods yet. 

Corey Walker is a budding historian and economist. He loves drinking hot chocolate, wearing sweaters, and watching football in the fall. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.

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