How Hurricane Ida Could Impact Gas Prices Across the U.S.

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Aug. 30 2021, Published 10:48 a.m. ET

Labeled as category 4, Hurricane Ida made landfall on Aug. 29 in New Orleans. The storm hit the same exact day as Katrina did in 2005. Although Ida is smaller than Katrina, it's stronger. The region's refineries supply most of the East Coast with gas, which means that the storm could impact gas prices for much of the U.S.

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While New Orleans residents are without power, the rest of the country waits to hear the full impact of the storm, including whether drivers will see higher gas prices.

The direct impact of Hurricane Ida: What we know so far

We're only one day out from the brunt of the storm, but Hurricane Ida is already causing a major impact. While Katrina was a category 3 storm, Ida is a category 4. When Ida hit land, sustained winds reached 150 mph. All of New Orleans was left without power, with the only power to the city currently coming from generators, according to regional energy company Entergy.

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Hurricane Ida will bring an economic impact, too.

One thing we do know about Ida's impact is that the storm hit a key energy infrastructure spot between New Orleans and Baton Rouge.

A full 60 percent of East Coast gas comes from refineries on the Gulf Coast. Meanwhile, the state of Louisiana makes up a fifth of the country's total fuel refining capabilities. As a result, the storm could impact gas prices on the East Coast and across the U.S.

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Basically, New Orleans is the most critical place for oil production in the U.S., and a big hurricane isn't a small factor.

Will gas prices go up following Hurricane Ida?

Prior to the hurricane, oil firms in the Gulf Coast cut 91 percent of crude oil production or 1.65 million barrels. Also, nearly 85 percent of the natural gas production was shut down.

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The reality is that Ida will most likely cause gas price increases in the region, including in states like Florida. However, the ripple effect could extend much further up the East Coast and into the West.

Mark Jenkins of the American Automobile Association told reporters, "Based on overnight movement in the futures market, a 10–20 cent jump at the pump is not out of the question. Where gas prices go from here will depend on the extent of the damage and how long it will take for fuel production and transportation lines to return to normal."

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Basically, we're only one day out of the storm, but don't be surprised to see higher rates at the pump in the coming days and weeks.

Beyond gas prices, the real concern lies with folks in New Orleans

While it's tough to say what the long-term outlook will be for New Orleans residents following Hurricane Ida, we have some history to go off of. Katrina caused $100 billion in property damage. We'll have to wait and see whether or not the post-hurricane $14.6 billion risk-reduction plan that was put in place following the 2005 natural disaster made a difference for the sub-sea-level region.

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