Hurricanes and Oil Glut | Russell T. Rudy Energy LLC
Hurricanes in the Gulf of Mexico used to be a significant factor in short term oil production, inventories, and prices. However, a recent article in “Rigzone” observes that Mother Nature and the shale revolution have combined to minimize, if not eliminate, this effect.
For the last two years, hurricane activity in the Gulf has been almost not existent. Barely a single worker was evacuated due to hurricanes in the area this year. In fact, the only significant hurricane in the Western Hemisphere in the recently ended season was in the Pacific. In fact, only one storm, “Bill’, posed any threat in the Gulf and it remained only a tropical storm.
However, the shale revolution has had an even greater influence on marginalizing the effect of hurricanes on oil markets. According to the U. S. Energy Information Administration in 2003, 27% of domestic oil production was centered in the Gulf of Mexico. By 2014 this had been reduced to 16% as total production increased dramatically and most of the increase came from onshore shale plays.
For example, as recently as 2008, Hurricane “Ike” shut in production in the Gulf of Mexico and prices spiked 44%. However, four years later, when “Isaac” shut in 90% of production in the Gulf, crude markets barely took notice.
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=141858&utm .
