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Former Shell Oil President John Hofmeister on Hurricane Sandy’s impact on gas demand and prices.
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Super -- sandy not only wreaked Havoc all over the East Coast but shut down 7% of East Coast oil refineries.
The good news the majority of them are back.
And slowly getting back on line however to refiners refineries that is both -- New Jersey remain without power tonight after being flooded.
No word yet when they'll be back up and running -- see them right there Phillips 66 and hats.
For more on the storm's impact on oil and gas prices I'm joined by former Shell Oil president John -- Meister.
Welcome back to the show sir I -- show folks some numbers here get your reaction.
Here is the damages to the refineries on the East -- six point 5% of total US refining capacity was in Sandy's path.
Six of those refineries there -- a total operating at reduced capacity not -- full capacity here to our offline.
Because they've suffered flooding they've lost power what's your biggest concern here.
I think it's the safety of the infrastructure.
More broadly -- than just refineries so for example it's good dip only if if the refineries we're not that badly damaged that worries me if they were flooded.
Because that may require the replacement of a lot of electrical.
But in the New York area in new England and the middle Atlantic states.
A lot of the supply comes in from out of the country.
So how's the infrastructure at the ports have we checked out yet but what damage was done.
To the ports with a lot of -- -- as we sought and win.
And then you have pipelines are -- here because.
You know you're -- about the refineries and then the ports obviously two very different things.
You also say there could be a very serious problem with distribution and retail service stations.
Tell us about that.
That's the biggest worry of all.
There is an inventory of finished product available probably 34 weeks worth of inventory -- the refineries can get up and running that's great.
But getting it distributed and getting it from the retail gas pump into the car takes electricity.
And with so many people suffering from electricity outages.
If the if they can't buy gasoline they gotta go back and forth to the store.
They have other kinds of things you're not gonna have mass transit perk for awhile so there's going to be a huge pole on gasoline inventory.
But if only a few stations have electricity you're gonna have gas lines galore.
That's gonna drive price spiking in the in the region and so I think people better.
Get ready to wait for gasoline until the electricity is restored.
Well you know there there was a lot of speculation that everybody would stay home in the wake of the storm I'm not so sure that's true.
I think the demand for gas is gonna be there right away as people try to make improvements to their house try to fix the damage try to go to The Home Depot and and and and buy the equipment they need to make things right do you think that at.
Demand will slacken -- pick up.
I think demand will increase in the first instance emergency responders.
Will will drink diesel oil like water.
Because they just won't shut off their engines and they're gonna be out there working 24/7.
Then you have people who are worried about finding gas they're gonna want -- top up their tanks as and when they can.
Because people get insecure we know from Texas Louisiana.
Alabama Florida.
People -- -- go out and get gas just in case and if they didn't top up before the storm they're gonna top up after the storm.
And there won't be the supply to back it up so you could drain the inventory very quickly.
By having people accelerate their purchasing -- and they can if there's electricity.
-- you've said in before that we could see a twenty cent to forty cent per gallon price spike.
Are you seeing -- just do you think that.
Ultimately gonna have people try to tap other peoples gas tanks trying to get gas I mean how serious is this gonna get.
I think with the electricity out if it's a week to two weeks and it could well be in the worst areas.
That affects retail stations so where will people get their -- maybe some of the gas station owners.
Are wired for generators that would help a lot but if you only have a few stations open.
-- -- -- And and now what about depth -- where they fill up the tank trucks to they have electricity.
Really critical to get the electricity system up and running.
At a people start forming gas lines they stopped behaving.
Kindly to one another but that's just.
Reality at -- -- Gas lines I've noticed that video that -- look thanks for coming on tonight will be in touch with you is a situation progresses that I've got to follow this story it's it's just.
Amazing thanks a bunch.
