Highlights
- Refinery use falls on Gulf Coast
- Gasoline demand rises
- Domestic crude oil production loses 1.5 million barrels daily
- Natural gas price holds $5.00
The Matrix
Government data on the impact of H. Ida on energy interests made their appearance in the weekly Petroleum Balance Sheets produced by the Energy Information Administration. The reports covered petroleum supply and demand for the week ending September 3, 2021.
The increase in gasoline consumption came about despite a dramatic reduction in refinery use. The Midwest lost 5.4 percentage points of refinery use during the week. Activity on the Gulf Coast fell a whopping 16.7 percentage points to 75.7 points. This drop came about because nine Louisiana were temporarily shut.
The impact of H. Ida is being offset each day. As the week of September 10th ends, three of the still-shut refineries accounted for 739,000 barrels of capacity.
The Gulf of Mexico (GOM) crude oil and natural gas production also declined. The Department of Interior’s Bureau of Safety and Environmental Enforcement, (BSEE) said that 65 offshore platforms were evacuated, about 11.6 percent of the GOM. Oil shut-in came to 1.2 million barrels per day.
The effect of H. Ida was confirmed by the sharp drop in total U.S. oil production. Production had fallen to ten million barrels daily as the Covid-19 pandemic advanced last year. Production has since struggled to regain output, but production of 11.5 million barrels daily for the week ending August 27 lost 1.5 million barrels per day, back to 10 million daily barrels.
Loss of Gulf of Mexico crude oil production and refinery throughput limited Gulf Coast supply. Heavy rainfall along the line of H. Ida’s path to the north and east failed to significantly depress demand. As noted, gasoline consumption actually had a small gain. The conflict between hopes for an expanding economy and a resurgent pandemic that could hold demand back has limited price ranges. There are signs that the global economy may be slowing, potentially limiting new highs on prices.
It was no surprise that the data revealed losses of supply and of demand. It may have been a surprise that demand for Motor Gasoline showed a small (30,000 barrels per day) increase.
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