As Tropical Storm Ernesto veers away from Gulf of Mexico production and the market shrugs off this force of nature, one has to wonder: Will hurricanes ever affect the gas markets again?NYMEX gas prices went screeching on the supply shortfall to a high of $14/MMBtu and Henry Hub to the high $13.60s/MMBtu later that year, .
The last time gas markets--both spot and futures--reacted sharply to such storms was the year of Katrina and Rita, when hurricanes effectively took out the benchmark Henry Hub and its surrounding infrastructure.
That same year, GOM production went from a seven-year high of 10.63 Bcf/d (16.4% of total US production) to 4.35 Bcf/d once the storms struck, according to Energy Information Administration data.
Hurricanes have since had little impact on GOM production for one single reason: shale. Why risk a supply cut-off when supplies can be gotten onshore? In some cases, they're very far onshore.
Take a look at the next times after Katrina and Rita that GOM production took a battering: hurricanes Gustav and Ike in 2008....MORE