Activity In Tropics Emerges As Next Big Hurricane Could Send Gas Prices To “Apocalyptic” Levels

Zero Hedge – by Tyler Durden

Three tropical disturbances are being closely monitored for development in the Atlantic as fears mount that above-average storms could wreak havoc on oil/gas operations in the Gulf of Mexico and send gas prices at the pump to “apocalyptic” heights.

“The lull in the tropics has come to an end as we’re now watching three different areas for development from the Gulf of Mexico to the central Atlantic,” The Weather Channel reports. 

The first system is an area of low pressure in the northern Gulf of Mexico and is expected to track westward early this week and could dump heavy rains along with parts of the Texas coast. Even though the storm has low probabilities of formation over the next 2-5 days, the system is situated near the Gulf Coast (PADD 3), which has the highest concentration of US refineries.

The second is a disturbance located 900 miles east-southeast of the southern Windward Islands and has a 70% chance of cyclone formation in 2 days with probabilities at 90% for five days. Called Invest 94L, the storm is expected the strengthen as it enters the Caribbean Sea this week. Behind Invest 94L is a tropical wave with a 20% probability of developing into a storm over the next five days.

The elevated tropical activity comes as OPIS energy analysis global head Tom Kloza told Fox Bussiness,” if we have an active tropical season” that impacts domestic refining efforts in the Gulf of Mexico, then it could send gas prices to “apocalyptic” heights.

“I think for gasoline, we go back above $5 and apocalyptic numbers come into play with hurricanes. 

“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,” Kloza said. 

Tropical activity in the Gulf can shutter offshore drilling rigs and onshore refining operations. And given today’s extremely tight refining capacity and a bulk of the nation’s refineries are situated on the Gulf Coast, we “have to cross our fingers that no refining infrastructure gets damaged by hurricanes or by the electric grid,” Kloza said.

Ahead of the hurricane season, which began on the first of June, Bloomberg Markets’s Jake Lloyd-Smith warned about the consequences of an active hurricane season and how it could severely disrupt refinery operations.

Everyone, including the Biden administration, has figured out that the bottleneck in refining is the culprit behind soaring diesel and gasoline prices. The US is structurally short and down 1 million barrels from April 2020 to 17.95 million bpd as of June.

All it would take is one (or multiple) major hurricanes with direct landfall on the Gulf Coast (or PADD 3) to send fuel prices at the pump even higher.

4 thoughts on “Activity In Tropics Emerges As Next Big Hurricane Could Send Gas Prices To “Apocalyptic” Levels

  1. at the current rate of fuel costs , i have noticed a significant reduction in traffic in my area

    If this occurs and the fuel prices go much higher , its probably safe to say my state would come to a screeching halt

    1. Yea I’m actually seeing more people buying online for stupid things such as toilet paper, dog food and water in order to save money on gas for something as quick as just driving down to their local Walmart or Target store. Either people are completely lazy or it’s them trying to save money on gas prices or the inflation woes. In any case, it’s adding stress on delivery services (where workers are already hard to find in this job market) as their parcel loads are greatly increasing on unnecessary things because of this.

      1. I’m going to tell you a little secret brother. We’ve known each other a long time, so keep it under your hat.
        The propaganda projection has always been that the people who are in the jungle are there because they are poor, ignorant, and lazy.
        Let this apocalypse happen. I guarantee you the only cars and motorcycles on the roads are going to belong to those poor ignorant lazy people from the jungle.
        Logic dictates and vanity tries to negate that the fact that the people in the jungle have to work harder and be more innovative just to survive.
        Throw a challenge at them and watch them rise to the occasion.
        The average communist fascist Trumptards will force the average communist fascist Trumptards to bring the price down to stop the destruction the people from the jungle are causing just to take their f-king gas. Think about what it will be like when it becomes food.
        It’s a hard life, but sometimes it feels comfortable and even a little exciting, living in the jungle.

        1. Hey no disrespect, Henry. I’m in the delivery/logistic business now. I’m just saying what I’ve been observing at work this past year or so. Many of these kinds of people actually live in rich houses and neighborhoods ($500,000 – $1 million dollar homes or more), so I’m not saying it’s just the poor or anything.

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