Oil and gas: What’s next for the energy landscape after Harvey?
Known as one of, if not the, oil and gas hub of the United States, the East Texas region suffered another dire consequence of Hurricane Harvey’s ripple effect: the interruptions to the energy companies who had set up shop in the affected areas.
BBVA Research USA, in a report on the economic impact of Hurricane Harvey, says disruption to refining activity could impact gasoline prices significantly, as 19% of oil production and 18% of natural gas production in the Gulf of Mexico was shut down. The report also states that if refineries are quick to act to restore operations, the net effect on U.S. private consumption will be modest.
But how can oil and gas companies minimize the impact on their business?
Companies can develop business strategies that take into account stronger and frequent storms.
“In the long run, companies can develop business strategies that take into account stronger and frequent storms,” said BBVA Research USA Economist Marcial Nava. “They also can invest to improve the safety of workers and facilities. In the short run, they should conduct exhaustive and accurate assessment of the damages, and communicate effectively with stakeholders and the general public.”
19% oil production & 18% natural gas production in the Gulf of Mexico was shut down due to #Harvey
Dorothy Marchand, Head of BBVA Compass' Energy Division, works closely with oil and gas companies. She stresses the importance of consistently monitoring the storm’s short and long term impacts. According to Marchand, there are two major points for companies to focus on in the aftermath.
We’re reaching out to clients to assess the impact on their operations.
“Operational and environment concerns caused by the storm needs to be a key component of recovery,” said Marchand. “We’re reaching out to clients to assess the impact on their operations. But they need to react quickly for safety purposes, and from what I’ve seen, they have.”
As recent activity in the Atlantic Ocean shows, including the destruction Hurricane Irma placed on the Caribbean and Florida, this year’s hurricane season has been more active than those in past years. With the season not concluding anytime soon, refineries are working to get capacity and distribution back on track.
According to website GasBuddy.com, which tracks prices and refining operations, gas prices are falling as more gas stations are seeing regular product delivery. According to website analysts, although this is good news, it could take a few more weeks for prices and operations to return to normal.
For more stories and articles related to Hurricane Harvey, click here.
Click here to make a contribution to those affected by Hurricanes Harvey and Irma. The BBVA Compass Foundation will match donations up to $150,000.
For more information on how BBVA Compass is helping those impacted by Hurricanes Harvey and Irma, click here.