The Potential Impact of West Coast Hurricanes

While rare, West Coast storms can have an effect on U.S. fuel retailers.

August 11, 2014

WASHINGTON – As we’ve seen recently with Tropical Storm Iselle and Hurricane Julio, although Pacific hurricanes are not often a major story, they still have the potential to affect the West Coast fuel operations. While the reverberations of such events throughout the nation may not be as evident, but can be real. California represents 7% of U.S. crude oil production, 14% of crude oil imports and is home to 17 operating refineries with a combined capacity of 1.9 million barrels per day, representing nearly 11% of the nation’s refining capacity.

Insulating other regions from significant effects associated with a West Coast disruption is the fact that most of the refined product produced in the region is designed specifically to meet California air quality standards and is consumed almost exclusively within California and its neighboring states (including Hawaii, affected by the recent storms).

If production goes offline for any reason, the West Coast may experience more dramatic market effects than other areas of the country because there are few refineries outside the area that can provide supplemental supplies. Other regions would be affected by the impact of the disruption on commodities markets and by the diversion of product to the West Coast in the event that fuel specifications are waived to allow supplemental supplies to enter the market.

For more on the effect of hurricanes and tropical storms on retail fuel prices, read the new NACS overview.

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