New York (CNN) – A major hurricane is approaching the United States’ primary refining hub, and the timing could not be worse. Tropical Storm Isaias, expected to become the Atlantic season’s first hurricane, is forecast to move toward the Gulf Coast at a moment when fuel inventories are already strained.
Refining capacity at risk
About 2.7 million barrels per day – roughly 14 % of the nation’s refining capacity – sit within or near the projected path of the storm, according to Andy Lipow, president of Lipow Oil Associates. Lipow expects that refineries in the New Orleans/Baton Rouge and Mississippi/Alabama regions may need to reduce output of gasoline, diesel, and jet fuel.
U.S. refineries are currently operating at about 95 % of capacity, providing a critical source of fuel for both domestic consumption and global markets. Any loss of capacity could force a reduction in diesel exports, a scenario that Mizuho Securities’ Robert Yawger warned would be “a disaster” for the market.
Inventory pressures
Fuel inventories that normally act as a buffer have already been drawn down. Federal data show gasoline stockpiles have fallen to their lowest seasonal level since 2012, while distillate inventories – primarily diesel – are at the lowest early‑October level recorded since tracking began in the early 1980s.
The Strategic Petroleum Reserve (SPR) has also been heavily tapped, now holding about 283 million barrels of crude – the smallest amount since 1982, when the reserve was first being filled under the Reagan administration.
Broader energy context
International disruptions have compounded domestic supply challenges. The war in Iran, Ukrainian drone attacks on Russian facilities, and export restrictions from China have all driven diesel prices to record highs. Gasoline recently topped $4.40 per gallon, a level never seen at this time of year.
In the Gulf of Mexico, about 512 000 barrels per day of oil production – roughly 25 % of the region’s output – have been shut in, according to the Marine Minerals Administration. Natural‑gas production in the area has also been reduced by about 16 %.
Potential impact of the storm
If Isaias reaches Category 2 strength with winds near 110 mph, the damage could extend beyond refinery shutdowns to delay tanker deliveries, affecting fuel supplies in states such as Florida that rely heavily on Gulf Coast shipments.
Recovery times vary by storm intensity. A Category 1 system may require about a week to restore normal refinery operations, while a Category 3 event could keep facilities offline for two to three weeks.
Industry response
Major producers, including Shell, Chevron, and BP, have already evacuated non‑essential personnel from offshore platforms as a precaution. The industry is closely monitoring the storm’s path and preparing contingency plans to mitigate supply disruptions.
While the exact impact will depend on the storm’s final track and intensity, officials stress that there is “no slack in the system” to absorb any significant loss of refining capacity without drawing further on already depleted commercial inventories.
Original reporting: KTVZ (Central Oregon) — read the source article.
