HOUSTON – Hurricane Gustav’s punch appeared to fall softly Monday on the vast energy complex along the U.S. Gulf Coast, alleviating fears of a fuel shortage and potentially delivering a break to businesses and consumers.
As winds passed over land and winds began to subside, oil market traders began to focus not on storm damage, but on their growing anxiety over the state of the global economy.
Even with 110 mph winds raking refineries that line the coast and rushed over the deep-water rigs off the shores of Texas and Louisiana, the price for a barrel of oil plummeted by more than $4 a barrel to just above $111 because Gustav was weaker than expected.
The average price for a gallon of gasoline slipped less than a cent overnight after beginning to rise for the first time in more than a month on the storm’s approach, according to the auto club AAA, the Oil Price Information Service and Wright Express.
In recent days, oil companies shut down virtually all oil and natural gas production in the Gulf, and the storm’s threat halted about 15 percent of the nation’s refining capacity based in the region.
Any serious damage to oil platforms and rigs or prolonged refining disruptions could cause a spike in energy prices. Eqecat Inc., a risk modeling firm, projected Monday that Gustav could knock out capacity for about five percent of both oil and natural gas production for the next year.
The U.S. Gulf Coast is home to nearly half the nation’s refining capacity, while offshore, the Gulf accounts for about 25 percent of domestic oil production and 15 percent of natural gas output.