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The ill effects of natural disasters on fuel prices

Hurricane Katrina shut down the majority of oil refineries in the Gulf of Mexico during 2005, causing fuel prices to skyrocket overnight. A national gas rush ensued leading to a widespread shortage lasting weeks. As tornadoes, floods and hailstorms ravage the heartland, the floods are far from over and may yet impact those oil refineries downstream near the mighty Mississippi.
Posted: May 25, 2011 - 6:01PM
Author: Don Bain

As summer progresses we have the similarly energized hurricane season to contend with. This all points to the possibility a wide array of variables have a possible and significant impact on the price of fuel.

Researching a report titled Big Storms Brewing, we learned that global warming and a single degree increase in the earth’s average temperature would add a lot of trapped solar energy into the weather mix. The consequences are simple – more extreme weather of all kinds – hurricanes, tornadoes, ice storms, blizzards, floods, droughts, heat waves and wicked cold fronts all resulting from this extra energy in the atmosphere.

Looking at the coming hurricane season's potential effects on fuel prices, AccuWeather.com pointed out how devastating these extreme conditions can be to the our fuel infrastructure. The possibility of a major disruption may be more likely.

According to their 2011 Atlantic Hurricane Season Forecast, a higher than average number of tropical systems is expected, with more hitting the U.S. coast. The Texas and Western Louisiana coastlines are likely landfalls, putting many of the country's refineries and offshore platforms smack dab in the path of these storms.

When refineries have to close, transportation costs to transport oil are passed to the consumer. Oil platforms shut down if storms make operations risky, decreasing supply. This affects not only fuel prices but those for propane, butane and kerosene as well.

"When an unforeseen event suddenly drives the price of fuel up, smaller businesses have a hard time keeping up," said Raquel Elie of FleetCards USA TrendWatch. "Owners have to take drastic measures to shore up their expenses, which can mean cutbacks in their budgets or even substantial downsizing. The best safeguard against this is to keep a close eye on prices and always be prepared for a change."

Fuel is still in a somewhat volatile state, despite its recent settling. For fleet related businesses, it is important to guard against increased costs by managing spending. Examine every aspect of your fuel consumption and stop inefficiencies at every step along the way.

Even if you only have a single vehicle to manage, seeing that it gets the highest mileage possible and efficiently managing your travel can keep fuel costs down, come what may.