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TrendWatch: How Hurricane Season Can Lead to Gas Crisis

ATLANTA, May 24, 2011 — When Hurricane Katrina shut down the majority of oil      refining capabilities in the Gulf of Mexico in 2005, prices skyrocketed overnight and incited a rush on gasoline that led to a nationwide, weeks-long gas shortage. With prices currently nearing post-Katrina levels on their own, this hurricane season could prove even more damaging to both businesses and consumers.

In a recent look at the 2011 hurricane season’s potential effects on fuel prices, AccuWeather.com detailed how devastating extreme conditions can be to the nation’s fuel infrastructure. While small disruptions occur relatively frequently during hurricane season, the possibility of a major disruption in the near future may be becoming more likely.

According to AccuWeather’s 2011 Atlantic Hurricane Season Forecast, 2011 is likely to bring a higher than average number of tropical systems than last year, with a higher percentage making direct hits on the U.S. coast. The forecast targets the Texas and Western Louisiana coastlines as areas of greater concern for tropical activity, putting a large percentage of the country’s refineries and offshore platforms in the path of these damaging storms.

When a hurricane causes refineries to close, transportation costs to move oil to other locations are passed down to the consumer. If costs become too high, the platforms themselves must shut down, decreasing supply. This affects fuel prices even more, as well as prices for oil byproducts such as propane, butane and kerosene.

“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.”

With the price of fuel in such a volatile state, it is important to guard your fleet against increased costs by managing your fuel spending. Finding cheaper prices on fuel is comforting in the short term, but to effectively manage your expenses, it is important to examine every aspect of your fuel consumption and stop inefficiencies at each step.

 

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