What Hurricane Ian means for meals and fuel costs

What Hurricane Ian means for meals and fuel costs

As elevated costs for oil and fuel pressure U.S. households, the nation faces a climate occasion that some concern will ship the prices of those necessities even larger: Hurricane Ian.

The class 4 hurricane on Wednesday sustained wind speeds of 150 miles per hour because it made landfall on Florida’s west coast.

What Hurricane Ian means for meals and fuel costs

Offshore oil properly platforms within the Gulf of Mexico off Port Fourchon, La., April 21, 2021.

Bloomberg by way of Getty Photos

Talking at an occasion in Washington, D.C., on Wednesday, President Joe Biden warned oil and fuel corporations in opposition to elevating costs amid the storm. “Don’t, let me repeat, don’t use this as an excuse to boost gasoline costs or gouge the American folks,” he mentioned.

Individuals needn’t fear about value will increase for gasoline on account of the hurricane, trade analysts instructed ABC Information, noting that the trail of the storm has averted key oil-producing states, akin to Texas and Louisiana.

The storm is not going to trigger widespread meals value hikes, both, since Florida is not a significant producer of meals, analysts mentioned. Nonetheless, the state is a prime exporter of citrus fruit — akin to oranges and grapefruits — which may expertise value hikes relying on the extent of harm, an analyst mentioned.

This is what to know concerning the affect Hurricane Ian may have on fuel and meals costs:

The affect of Hurricane Ian on fuel costs

Hurricane Ian is not going to have an effect on gasoline costs, trade analysts mentioned.

“I do not assume it will have any affect in any respect,” Andy Lipow, a longtime oil analyst and president of Lipow Oil Associates, instructed ABC Information.

Florida, the analysts mentioned, merely would not produce a lot oil. The state would not host any oil refineries and accounts for about 6,000 barrels of oil manufacturing every day, Lipow estimated. That output makes up a tiny fraction of general U.S. oil manufacturing, which quantities to 11.8 million barrels per day, the U.S. Vitality Info Administration reported this month.

“Simply as a matter of geography, there isn’t a direct impact on the oil and fuel market,” Pavel Molchanov, a senior vitality analyst at Raymond James, instructed ABC Information. “Florida is just not an energy-producing state in the best way Texas and Louisiana are.”

PHOTO: A sail boat is washed into shallow waters at Sarasota Bay as Hurricane Ian approaches on Sept. 28, 2022, in Sarasota, Fla.

A sail boat is washed into shallow waters at Sarasota Bay as Hurricane Ian approaches on Sept. 28, 2022, in Sarasota, Fla.

Sean Rayford/Getty Photos

Hurricane Ian did trigger short-term disruption of main oil platforms within the gulf of Mexico, nevertheless. As a precaution, BP and Chevron on Monday reduce manufacturing at offshore oil platforms, evacuating personnel because the storm grew in energy, Lipow mentioned.

These services produce 485,000 barrels per day and signify 27% of oil manufacturing within the Gulf of Mexico however lower than 5% of general U.S. oil manufacturing, Lipow mentioned.

However the disruption is short-term. BP started working to return personnel to its offshore platforms on Tuesday, the corporate mentioned.

“As soon as they get the folks on the market, it is again to manufacturing inside a day,” Lipow mentioned.

The impact of Hurricane Ian on meals costs

Equally, the hurricane will not trigger large-scale hikes in meals costs, since Florida would not play a significant function within the sector, trade analysts mentioned.

“It is only one state within the union and a state that actually doesn’t produce lots of meals,” Kenneth Scott Zuckerberg, lead economist for grain and farm provide with CoBank, instructed ABC Information. “Within the grand scheme of issues, that is properly inside the context of what occurs within the agricultural sector.”

Nonetheless, the state does issue considerably within the manufacturing of two gadgets: fertilizer and citrus fruit, the analysts mentioned.

Phosphate, a key ingredient of fertilizer, is mined and manufactured within the Tampa Bay-area, the place a single firm, Mosaic, produces 50% of North American phosphate fertilizer, the corporate says.

Harm to phosphate-related services may disrupt the tight marketplace for fertilizer, however farmers usually settle for smaller revenue margins quite than move the associated fee will increase alongside to shoppers, Zuckerberg mentioned.

One other prime export in Florida, citrus fruit, accounts for 70% of such meals produced within the U.S. Oranges, grapefruits, tangerines and the juices derived from them may endure a hike in costs in a matter of weeks if the hurricane damages crops, mentioned Arlan Suderman, a chief commodities analyst for monetary providers agency StoneX.

“The market is anticipatory,” Suderman instructed ABC Information. “As quickly because the hurricane goes by means of they usually make an evaluation, they’re going to be pricing in expectations.”

If harm to citrus timber proves important, Suderman mentioned, the restoration of the citrus provide may take “a number of years.”