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If you have listened to the news stories about the recent hurricane Irene, you can understand the devastation that a single storm can cause.  Our hearts and prayers here at My Choice Energy go out to the families that have lost loved ones and for those that have experienced severe damage to their homes and businesses.

Hurricane Irene is the third deadliest on record at 41 dead with Katrina being the deadliest at over 1100.  Even though the intensity was at a category 1 and Katrina was a 5, Irene was a massive storm that dumped double digit rainfall on the East Coast. With the wide spread flooding, many people have lost all of their possessions.

Can Hurricane Irene increase the natural gas prices?

Almost all weather related disasters have a rippling effect on energy prices.  For My Choice Energy, we pay close attention to the weather to determine the right course of action to take when pricing the market for spot or long term natural gas supply.  If a hurricane enters the Gulf of Mexico, the path is critical because the majority of oil and gas producing rigs (over 4,000 manned and unmanned) are positioned right off the shores of Louisiana, Alabama and Northeastern Texas.  If there is even a remote chance that the storm could come close to those producing assets, the producers will evacuate all manned platforms and shut-in the production.  Historically, this action causes the spot prices to increase because approximately 20% of our national supply portfolio comes from the Gulf.  During a hurricane, the top surface destruction is devastating in itself, it is the sub-surface damage caused by the ocean surge that could shut-in production for a long period of time.  In fact, in 2010, some of the resources that were affected by hurricane Katrina were finally put back into service.  In addition, the market lost 2% of the oil and gas production from the Gulf for good as the result of hurricanes Katrina and Rita.

As of this writing, another hurricane is brewing in the Atlantic which could hit the Eastern coast of the US but not as direct as Irene.  Also there is a tropical depression forming in the straights of the Yucatan which could develop into a hurricane right in the Gulf of Mexico, which will definitely have an impact on energy prices.

In the past twenty years, there have been only a hand full of winters that were truly devastating to the consumer.  So the real threat, at least in the past 6 years have been the hurricane seasons causing the disruption of supply.  So, if you are a large buyer of energy, either early summer or late fall could be the best times to seriously look at locking in fixed prices for natural gas.  Hurricane Irene did not make things any easier.