With two major hurricanes arriving on the Gulf Coast during the month of September, crude oil production suffered its largest disruption since 2005 when Hurricanes Katrina and Rita struck the region, according to a monthly statistical report from the American Petroleum Institute.
The recent onslaught of Hurricanes Gustav and Ike resulted in the shutting in of an estimated 32 million barrels of crude oil and 164 billion cubic feet of natural gas for the month. Domestic crude oil production for September barely exceeded four million barrels per day and was down 17 percent from a year earlier.
Added to the production disruption was the decision by consumers to cut back on usage as a result of high prices and a shaky economy. Deliveries of nearly all major products declined from a year ago in September and for the quarter as a whole--putting US product deliveries at their lowest third-quarter level in ten years. Deliveries, an indicator of consumption, fell nearly 1.3 million barrels per day from a year ago and averaged just 19.66 million barrels per day during the third quarter.
Meanwhile, Hurricane Gustav in early September led to the shutdown of 1.3 million barrels per day of crude production and 7.1 billion cubic feet per day of natural gas production in the Gulf of Mexico. There was scant time for recovery before Ike blew through the Gulf about 10 days later.
Hurricane disruptions also hindered the delivery of foreign crude oil to Gulf Coast ports, and as a result, crude oil imports fell nearly 13 percent from a year ago to less than nine million barrels per day. That was their lowest monthly level in more than five years.
Although product imports rose from August’s level, September’s total petroleum imports still fell by nearly 12 percent from a year ago to 12.0 million barrels per day. The government delivered close to five million barrels from the federal Strategic Petroleum Reserve to a number of refiners seeking replacement crude oil supplies.
Gustav and Ike also forced precautionary shutdowns of refineries potentially in the storms’ paths--and following the storms, displaced workers, disruptions to electricity supply, and other infrastructure hindered a quick recovery in many cases.
At one point roughly four million barrels per day of US refinery capacity was shut in. September’s inputs to crude distillation units fell nearly 16 percent from a year ago to their lowest level since February 1992.
Gulf Coast refineries dragged down the national refinery utilization rate to 74.2 percent, the lowest since March 1985--though Midwest refineries, for example, ran at nearly 92 percent of capacity.
Inventories fell for crude oil and most products during September. More than six million barrels of gasoline were supplied from inventory, a counter-seasonal move, which helped to meet consumer demand despite the refinery disruptions. That put month-end gasoline inventories at 191 million barrels, the lowest for any month in more than three years.
Distillate inventories fell more than five million barrels to 125.5 million barrels, down 6.5 percent from a year ago. Crude oil inventories declined four million barrels to 299 million barrels, down four percent from a year ago.
At the same time, major product deliveries were down 5.2 percent from the third quarter of 2007. The highest third-quarter deliveries were in 2005, when they had reached 20.92 million barrels per day. For the quarter, gasoline deliveries fell a full four percent to their lowest third-quarter level in six years. Distillate deliveries declined 7.4 percent, while jet fuel deliveries slid by 2.7 percent. Residual deliveries were down more than 14 percent.