Hurricane Isaac already has forced several energy giants to shut down major Gulf oil and gas projects until the storm passes. That's going to spell higher gas prices for U.S. consumers.
The emergency response will be the largest challenge to the U.S. energy sector since 2008, when Hurricane Gustav and Ike struck the region. Both hurricanes caused month-long disruptions at off-shore facilities and damaged a number of midstream operations in processing, pipeline, and storage along the coast.
By Monday, the U.S. Bureau of Safety and Environmental Enforcement reported that daily oil production in the Gulf was down 78% and natural gas production down 48%. Energy producers including Royal Dutch Shell Plc (NYSE ADR: RDS.A, RDS.B), Chevron Corp. (NYSE: CVX) and British Petroleum (NYSE ADR: BP) have evacuated more than 346 platforms and 41 rigs.
More shutdowns are expected on Monday and Tuesday as the storm gains strength.
"There's panic right now that this could stage a direct hit on New Orleans or the Chevron refinery in Pascagoula [Mississippi]," Tom Kloza, chief oil analyst for the Oil Price Information Service, told ABC 15 News in Arizona. "The refineries, once they're within 24 hours of either tropical storm or hurricane force winds, they have to start a shutdown.
British Petroleum shut down four oil and gas platforms in the Gulf of Mexico on Sunday and evacuated all of its workers. The shutdown includes the evacuation of Thunder Horse, the world's largest production semi-submersible with a production capacity of 250,000 barrels of oil a day and 200 million cubic feet a day of natural gas.
The company is still under obvious scrutiny of its offshore projects given the Deepwater Horizon spill in 2010 which killed 11 workers and gushed millions of gallons of oil into the Gulf.