Storms Hit Texas Coast

As our friends and neighbors along the Texas Gulf Coast say “Hello” to Dolly, we are reminded about how weather influences oil and gas prices.

Temperatures affect energy use throughout the year. The summer heat increases the need for natural gas to produce electricity and for natural gas and refined products to operate peak shaving plants. In the winter natural gas is used to heat our homes and businesses.

The impact of hurricanes on the oil and gas industry is often forgotten by the public. According to the Energy Information Administration, the US offshore supplies about 25% of the nation’s natural gas production and about 24% of its oil production. When tropical storms threaten, the platforms must be shut-down. Severe hurricanes can damage platforms and underwater facilities and pipelines prolonging the recovery.

The difficulties in predicting temperature and severe weather help explain why forecasting oil and gas prices ranges from tricky to impossible.