Earthquakes, floods, hurricanes, tornadoes, droughts and other natural disasters affect infrastructure and physical capital, employment, farm production, energy and other aspects of an economy. Disasters affecting key trade centers, such as coastal areas that host major ports, can impact the global supply chain. The effects may be only short-term, however that depends on how soon affected ports resume operations.
Late last week, a hurricane warning was issued by the National Weather Service stretching from east Morgan City, La., to the Alabama-Florida border which prompted the closing of the port of Miami and Tampa over the weekend. Hurricane Isaac headed up the Gulf Coast, unleashing damaging 80 mile-per-hour winds and causing widespread flooding in New Orleans and other coastal cities. Isaac, upgraded from tropical storm to Category 1 hurricane earlier Tuesday, first touched land in Plaquemines Parish, about 90 miles southeast of New Orleans Tuesday evening before heading back over the Gulf of Mexico.
According to the U.S. Energy Information Administration, the Gulf accounts for about 23% of all U.S. oil production and nearly 7% of its natural gas output. Aside from this production, the region is home to 30% of U.S. natural gas processing plant capacity and 44% of the country’s refining capacity. Oil companies scrambled to remove workers from offshore oil rigs in the Gulf, and many of the nation’s refiners, who turn Gulf Coast crude oil into gasoline, were either shutting down or slowing operations. Marathon Petroleum initiated the shutdown of its 490,000 barrels-per-day refinery in Garyville, Louisiana and Phillips 66 has temporarily shut down its 247,000 barrel-per-day refinery in Belle Chase, Louisiana. Plus, the single largest entry point for crude oil shipments coming into the U.S. — The Louisiana Offshore Oil Port (LOOP) — suspended offloading of oil tankers as well which usually averages between 900,000 and 1 million barrels of oil a day.
Yesterday the bustling port of New Orleans was ordered closed. Barge traffic along the Mississippi River will be affected by the closure and the Coast Guard advised commercial and recreational vessels all along the lower Mississippi and its tributaries to get out of harm’s way.
PIERS sends well wishes of safety and comfort to all those affected by Isaac’s path.