(NEW YORK) — As elevated prices for oil and gas strain U.S. households, the country faces a weather event that some fear will send the costs of these essentials even higher: Hurricane Ian.
The category 4 hurricane on Wednesday sustained wind speeds of 150 miles per hour as it made landfall on Florida’s west coast.
Speaking at an event in Washington, D.C., on Wednesday, President Joe Biden warned oil and gas companies against raising prices amid the storm.
“Do not, let me repeat, do not use this as an excuse to raise gasoline prices or gouge the American people,” he said.
Americans need not worry about price increases for gasoline as a result of the hurricane, industry analysts told ABC News, noting that the path of the storm has averted key oil-producing states, such as Texas and New Orleans.
The storm will not cause widespread food price hikes, either, since Florida isn’t a major producer of food, analysts said. However, the state is a top exporter of citrus fruit — such as oranges and grapefruits — which could experience price hikes depending on the extent of damage, an analyst said.
Here’s what to know about the impact Hurricane Ian will have on gas and food prices:
The impact of Hurricane Ian on gas prices
Hurricane Ian will not affect gasoline prices, industry analysts said.
“I don’t think it’ll have any impact at all,” Andy Lipow, a longtime oil analyst and president of Lipow Oil Associates, told ABC News.
Florida, the analysts said, simply doesn’t produce much oil. The state doesn’t host any oil refineries and accounts for about 6,000 barrels of oil production each day, Lipow estimated. That output makes up a tiny fraction of overall U.S. oil production, which amounts to 11.8 million barrels per day, the U.S. Energy Information Administration reported this month.
“Just as a matter of geography, there is no direct effect on the oil and gas market,” Pavel Molchanov, a senior energy analyst at Raymond James, told ABC News. “Florida is not an energy-producing state in the way Texas and Louisiana are.”
Hurricane Ian did cause temporary disruption of major oil platforms in the gulf of Mexico, however. As a precaution, BP and Chevron on Monday cut production at offshore oil platforms, evacuating personnel as the storm grew in strength, Lipow said.
Those facilities produce 485,000 barrels per day and represent 27% of oil production in the Gulf of Mexico but less than 5% of overall U.S. oil production, Lipow said.
But the disruption is temporary. BP began working to return personnel to its offshore platforms on Tuesday, the company said.
“Once they get the people out there, it’s back to production within a day,” Lipow said.
The effect of Hurricane Ian on food prices
Similarly, the hurricane won’t cause large-scale hikes in food prices, since Florida doesn’t play a major role in the sector, industry analysts said.
“It’s just one state in the union and a state that really does not produce a lot of food,” Kenneth Scott Zuckerberg, lead economist for grain and farm supply with CoBank, told ABC News. “In the grand scheme of things, this is well within the context of what happens in the agricultural sector.”
However, the state does factor significantly in the production of two items: fertilizer and citrus fruit, the analysts said.
Phosphate, a key ingredient of fertilizer, is mined and manufactured in the Tampa Bay-area, where a single company, Mosaic, produces 50% of North American phosphate fertilizer, the company says.
Damage to phosphate-related facilities could disrupt the tight market for fertilizer, but farmers typically accept smaller profit margins rather than pass the cost increases along to consumers, Zuckerberg said.
Another top export in Florida, citrus fruit, accounts for 70% of such foods produced in the U.S. Oranges, grapefruits, tangerines and the juices derived from them could undergo a hike in prices in a matter of weeks if the hurricane damages crops, said Arlan Suderman, a chief commodities analyst for financial services firm StoneX.
“The market is anticipatory,” Suderman told ABC News. “As soon as the hurricane goes through and they make an assessment, they’ll be pricing in expectations.”
If damage to citrus trees proves significant, Suderman said, the recovery of the citrus supply could take “several years.”
Copyright © 2022, ABC Audio. All rights reserved.
