How Will Hurricane Hermine Affect Oil Stocks?

Hurricane Hermine was recently upgraded from a tropical storm to a hurricane, meaning the wind speeds will be sustained at over 74 miles per hour. So far the main impact has been on the water, with chaotic waves battering the coastline. Although two fatalities have occurred from high winds on land, it’s thought Hermine will stay just off the coast. But given the off shore location of oil rigs, could this affect oil stocks?

Shutting down

In its tropical storm phase, Hermine hit the Gulf of Mexico. As a precaution, several oil facilities were temporarily shut down and evacuated by the Bureau of Safety and Enivronmental Enforcement (BSEE). They announced that ten platforms and one oil rig were still evacuated and temporarily out of use at the start of September. But after inspections and checks, production should be able to resume in cases where there is no damage.

Hermine has now made its way up the east coast towards Florida and New York as a category 1 hurricane. With increasing wind speeds, it’s thought it could do more damage in this region. While the refiners on the east coast are the most at threat, they are actually designed to cope with storms up to category 3 (sustained wind speeds of 111-129 miles per hour). However, the oil stocks could still suffer from other hurricane effects.

Indirect impact

Power outages can affect the function of oil platforms. Despite their offshore location, some platforms have onshore power sources. In addition, the dangerous sea conditions make it problematic getting workers to/from and in/out of the oil platforms. The other problem is of course shipping. Transporting oil by sea will be an issue while the hurricane is in the region and so the stocks in certain areas will fall for the time being.

Because of the indirect impact of transport and power difficulties, the main hope for America’s oil industry is that Hermine won’t stick around too long. Over 215,000 people have suffered from power outages across Florida. It’s now fallen back to a tropical storm but could regain its hurricane wind speed.

Refining oil

It isn’t just storms that bring about problems for oil refineries. There are other areas for improvement. In some cases, parts of the refineries are powered using steam. It’s essential that the steam and water don’t become polluted, as this will cause damage to the pipes and boilers. ‘How to Save Cash in Refineries by Using Online TOC Analysers’ discusses the potential benefits of using online TOC analysers to test water purity.