There was a time when hurricanes posed a major threat to the oil and gas industry. While a direct hit on the petrochemical complex in Houston would still cripple the energy sector for months, a normal hurricane zipping through the Gulf of Mexico threatening oil and gas rigs no longer sends shudders through those markets.
Hurricane Laura proves the point.
In the days before Laura made landfall as a category 4 hurricane, oil and gas producers took the prudent steps of shutting down 82% of oil production in the gulf and 59% of the natural gas production. Even with that supply interrupted, the price of gas at the pump didn’t budge, and world oil prices didn’t flinch.
In the current climate, we have so much oil inventory that curtailing it a bit doesn’t hurt, and in some ways, it can help. Oil producers aren’t worried about prices going higher today, they’re worried about a second wave of the virus cutting demand even further, while the OPEC nations increase supply.
As for production in the Gulf, it’s much less important today in general as fracking on land has become the major source of domestic production.