Released on September 9, 2010
(Next Release on September 15, 2010)

The Peak of the Hurricane Season Is Here

Although crude oil production outages resulting from tropical storms and hurricanes have been relatively minor so far this year, this week marks the beginning of the peak of the hurricane season in the Gulf of Mexico. While Hurricane Earl did not enter the Gulf of Mexico, about one third of the named Atlantic storms eventually pass through the Gulf.

During June and July of 2010, the Gulf oil producing region was impacted by two storms: Alex and Bonnie. Alex reached hurricane strength only briefly and shut in a cumulative total of about 1.6 million barrels of crude oil production. Tropical Storm Bonnie was downgraded to a tropical depression as it moved across the Gulf of Mexico but it still caused about 2.7 million barrels of cumulative shut-in production. The month of August was uneventful in terms of severe weather disruptions.

Although tropical storms can occur in the Gulf of Mexico as early as May, hurricanes occur relatively infrequently in the Gulf during the months of June and July (see Figure 1). The number of hurricanes and tropical storms typically peaks in September. During 56 out of the last 100 years, at least one tropical storm or hurricane has passed through the Gulf of Mexico at some point between September 10th and 25th. Tropical weather activity generally does not subside until late October.

Figure 1.  Frequency of Gulf of Mexico Hurricanes and
                Tropical Storms, 1910-2009

                                         Source:  EIA calculations using NOAA's Hurdat database

On August 5, the National Oceanic and Atmospheric Administration (NOAA) issued an update to its 2010 Atlantic Hurricane Season Outlook. This outlook is similar to the original report issued in May and calls for a 90-percent probability of an above-normal season, including 14 to 20 named storms of which 8 to 12 could become hurricanes. EIA has updated its projections for shut-in production in the Gulf of Mexico, not only to reflect the new information from NOAA’s Seasonal Outlook but also to incorporate an adjustment to the model that reflects the changes in Gulf crude oil production over the past decade. EIA projects a cumulative total of about 24 million barrels will be shut in before the end of the storm season, including the estimated 4.3 million barrels shut in during Alex and Bonnie. This projection compares with a total of about 12.5 million barrels during a season with normal hurricane activity.

Retail Gasoline Price Unchanged, Diesel Price Lower
The U.S. retail gasoline price held steady at $2.68 per gallon as of September 6, 2010, nine cents higher than last year. The East Coast and Gulf Coast prices each dipped a cent to $2.60 per gallon and $2.52 per gallon, respectively. The Midwest reported an increase as the price rose almost 4 cents to $2.67 per gallon, while the Rocky Mountain price grew a fraction of a cent to stay at $2.82 per gallon. Although the West Coast average continued to be the highest in the Nation, the price dropped four cents to $3.00 per gallon. California prices declined another nickel to $3.04 per gallon.

Retail diesel fuel prices decreased for the fourth consecutive week, falling a cent to $2.93 per gallon. Prices are 28 cents higher than at this time last year. The East Coast, Midwest, and Gulf Coast prices all dropped about a penny to $2.92 per gallon, $2.90 per gallon, and $2.88 per gallon, respectively. While the Rocky Mountain and West Coast averages moved slightly higher, the prices remained virtually unchanged from last week. The California price lost half a cent to remain at $3.15 per gallon.

Propane Registers a Large Build
Total U.S. inventories of propane rose by 1.5 million barrels to end at 64.0 million barrels, 6.7 million barrels lower than the same week last year. The East Coast region grew by the largest amount, adding 1.1 million barrels of propane stocks. The Gulf Coast regional inventories grew by 0.6 million barrels and the Rocky Mountain/West Coast region was up slightly. The Midwest regional stocks dropped 0.3 million barrels. Propylene non-fuel use inventories represented 3.8 percent of total propane/propylene stocks.

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