What the storms in the Gulf mean for oil and gas prices

Laura threatens the US; Marco weakens 3:08

(CNN) - Two tropical storms, Laura and Marco, could hit the US Gulf Coast this week. In previous years, that would send oil and gas prices skyrocketing. It will not be like this this year.

Average gasoline prices are up just 1 cent from last week to $ 2.19 per gallon for regular, according to AAA figures. Oil prices rose just 1% in early trading on Monday.

The reason is simple: The United States can do well without refining oil and gasoline, an operation that could be halted by storms. Record U.S. oil production, combined with a sharp drop in fuel demand during the covid-19 pandemic, means there is a record glut.

"In terms of crude oil, the United States has never been in better shape," said Tom Kloza, chief oil analyst at the Oil Price Information Service, which monitors AAA prices.

Past storms, such as Hurricanes Katrina and Rita in 2005, and Hurricane Harvey, which hit the Texas refinery base heavily in 2017, caused spikes in gasoline and oil prices. Those storms came at times of high demand and much more limited supplies, Kloza said.

Demand for oil and gas has plummeted as millions of Americans no longer commute to work, either because of job losses or because they work from home. Years of rising shale oil production in the central United States mean that offshore oil rigs off the Gulf Coast are no longer as important as they once were.

Even with half the industry shut down before the storms, according to government figures, the future markets for oil and gasoline are not showing much movement.

"There is too much cushion of supply, too much destruction of demand to have any kind of devastating impact," Kloza said. "We will see little impact on prices."

Oil Prices Storms