Five weeks ago, The Weather Channel predicted a ‘below average’ hurricane season was in store for us in 2014.
So this morning, with Hurricane Arthur barreling up the Atlantic coastline towards North Carolina, I can’t help but wonder if this year’s prediction will be as inaccurate as their call for an extremely active season in 2013 (it ended up being one of the quietest hurricane seasons on record).
And unless you drive a Tesla, you’ve probably noticed that high gas prices are once again plaguing motorists. Unfortunately, we can’t lay the blame for higher prices at the pump on the usual scapegoat – greedy oil companies.
Lately, crude prices have been comfortably trading in triple-digits thanks to the geopolitical mess going on in both Iraq and the Ukraine. Throw in the ongoing civil war in Syria and Libya, and it’s hard to imagine oil going down anytime soon.
Now, however, we have even more factors keeping oil prices at a premium. And not only do we have weather-related volatility to contend with, but don’t forget that the summer driving season is in full swing.
Gasoline prices have already topped $4 per gallon in states like California, Hawaii, and Alaska. If things continue like this, they won’t be alone, as gas prices in New York and Connecticut aren’t too far behind right now.
In fact, Hurricane Arthur is already having an impact on gas prices in Connecticut, and the storm is expected disrupt supply (it also doesn’t help that it’s the Fourth of July weekend).
Then again, an active hurricane season will curtail more than just oil production.
The EIA estimates that about 12 million barrels of crude and 30 billion cubic feet of natural gas could be lost while rigs go off-line during this hurricane season – that would be four times higher than last year’s slow season.
Believe me, it doesn’t take much to cause prices to fluctuate.
Last year, prices jumped briefly after Tropical Storm Karen hit last October. If you recall, that was the only major storm to have an affect on oil prices in 2013. As it moved through the Gulf of Mexico, all the major plays either halted or cut production to some degree. BP, ExxonMobil, Anadarko Petroleum, Chevron, and Royal Dutch Shell were among those that took action.
Yet, things are different this year, especially as more turmoil hits key oil producing regions around the world. In other words, we can’t expect to find much relief at the pump over the next.
Truth is, cheap oil is gone forever, which is why we’ll be crossing our fingers that this year’s hurricane outlook holds true.
Until next time,