Hurricane Season May Be A Perfect Storm for Energy
The 2008 hurricane season officially begins on Sunday, and active season could have serious implications for energy prices.
“Just the mere threat of a hurricane, if it comes from June to September 15, is probably enough to send prices up 25 cents or more just on the proviso that it could hit the U.S. Gulf Coast,” says Tom Kloza, senior analyst at the Oil Price Information Service.
As high as energy prices are, traders have barely begun to factor in the risk of a hurricane, according to Kloza, and that could be a problem.
The government is predicting as many as nine hurricanes this season, and Colorado State University’s William Gray sees as many as eight.
“As best we can see it this year, we should have a very active year,” Gray said.
Refineries have been cutting back their production as Americans have cut back their driving. That means gas supplies are tight, and the margin for error even tighter -- leaving room for the perfect energy storm.