The chart above shows that the rise in U.S. onshore natural gas production has tended to diminish the impact of hurricanes on prices. The percentage of onshore production is shown on the right axis and gas prices on the left axis. The most recent hurricane, Isaac, struck the Louisiana coast on August 28th as a Category 1 storm. Isaac knocked out electricity to more than 900,000 homes and is estimated to have caused about $2 billion in damage in Louisiana alone. However, unlike previous hurricanes, it had a negligible impact on natural gas prices nationwide. In the first half of 2012 before Isaac hit, U.S. marketed gas production averaged 6.2 percent from Federal Gulf of Mexico waters. Seven years before, the percentage averaged 19.2 percent.
Two years ago the American Clean Skies Foundation and the Bipartisan Policy Center jointly convened the Task Force on Ensuring Stable Natural Gas Markets to examine historic causes of instability in natural gas markets and to explore potential remedies. One of the Task Force’s findings was that the growth of on-shore shale gas was reducing the susceptibility of gas markets to price instability (while also accommodating new demand). The relatively minimal impact of recent Gulf hurricanes on gas prices provides support for this thesis. To learn more, read the report of the 2010 Task Force on Ensuring Stable Natural Gas Markets.
Natural gas price and production data: Energy Information Administration, November 30, 2012, http://www.eia.gov/naturalgas/data.cfm
- Hurricane Damage to Natural Gas Infrastructure and Its Effect on the U.S. Natural Gas Market. Energy and Environmental Analysis, Inc. November 2005.
- Comparing the Impacts of the 2005 and 2008 Hurricanes on U.S. Energy Infrastructure. U.S. Department of Energy. February 2009.
- Short-Term Energy Outlook Supplement: 2012 Outlook for Hurricane-Related Production Outages in the Gulf of Mexico. U.S. Energy Information Administration. June 2012.
- BSEE Hurricane Isaac Activity Statistics: August 29, 2012. Bureau of Safety and Environmental Enforcement.