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Isaac brings pain at the pump for consumers — and for Obama
Gas prices are likely to rise due to Tropical Storm Isaac, creating a new political headache for President Obama at a time when polls show him leading Mitt Romney on energy policy.
The storm — which is expected to be a hurricane when it makes landfall — has forced suspension of more than three-quarters of Gulf crude oil production, with companies such as BP, Shell and Anadarko clearing workers from platforms. Several refining companies have also shut down facilities in the path of the storm.
Analysts said they expect gas prices, which are now hovering around $3.75 per gallon, to rise anywhere from 5 to 15 cents — an unwelcome development for Obama, whose reelection could hinge on how voters feel about the economy.
Patrick DeHaan of Gasbuddy.com said gas prices are certain to rise, though it’s hard to predict by how much.
“Much of the potential impact remains to be seen. There are many unknowns that still exist — strength of hurricane upon landfall, damage, etc.,” he said in an email.
While the storm is forcing suspension of production and refineries, the expectation that it won't become a Category 3 hurricane has dampened fears that it will cause prolonged disruptions, said Hamza Khan, an analyst with the Schork Group.
Nonetheless, the storm is jostling oil markets.
U.S. prices bounced up to $97.72 in trading on the New York Mercantile Exchange Monday, but settled back down at $95.47 amid speculation that U.S. officials might tap the Strategic Petroleum Reserve.
The White House and the Energy Department did not respond to requests for comment on whether officials are considering a release from the reserve.
While the worst fears about the storm appear unlikely to be realized, rising gasoline prices are still bad news for Obama ahead of the election.
Soaring pump prices threw the White House on the defensive earlier this year, but the issue faded as prices fell from their early April peak of nearly $4 per gallon.
Romney has tried to capitalize on the doubling of gas prices during Obama’s time in office, even though policymakers have few tools to influence pump prices.
The Romney campaign’s daily morning email to reporters Monday cited gasoline prices when making the point that “middle-class families are having to do more with less as household costs skyrocket.”
Average gas prices remain well below the all-time high of $4.11 per gallon, reached in the summer of 2008.
Recent polls have shown Obama ahead of Romney when voters are asked who they prefer to handle energy policy.
A USA Today/Gallup poll released last week showed Obama with a 13-point edge, while a Washington Post/ABC News poll unveiled Monday gave the president an edge on the topic.
Isaac in recent days has emerged as a political wild card for both parties.
The storm prompted GOP organizers to scuttle the first day of their national convention in Tampa, Fla., and has created a distraction for a party seeking to focus political attention on the weak economy.
The storm’s path through the Gulf has prompted a major pullback of operations among oil companies.
On Monday afternoon the Interior Department estimated that 78 percent of Gulf crude oil production was “shut-in.” The Gulf accounts for almost a fourth of total U.S. crude production.
Industry personnel have been evacuated from 346 oil-production platforms, or almost 60 percent of the 596 manned platforms in the Gulf, according to an early-afternoon report from Interior’s Bureau of Safety and Environmental Enforcement.
The storm is expected to make landfall as a hurricane late Tuesday or early Wednesday. It is affecting the northern Gulf Coast region, including metropolitan New Orleans and the western Florida Panhandle.
The National Weather Service reports that Isaac could bring a storm surge and rising tides that flood parts of Louisiana, Mississippi and Alabama, as well as the Florida Panhandle and the state’s west coast.
In addition to forcing evacuation of oil-and-gas platforms and rigs, the storm is also prompting a number of refinery shutdowns.
Marathon Petroleum Corp. said it was shutting down its 490,000 barrel-per-day refinery in Garyville, La., while Phillips 66 is shutting down its 247,000 barrel-per-day refinery in Belle Chasse, La., and Valero is shutting down a pair of Louisiana refineries with a combined capacity of 330,000 barrels per day, according to the companies and published reports.
Shell is operating facilities in Louisiana and Alabama at reduced rates. Overall the storm has reportedly taken about 1.3 million barrels per day of refining capacity offline.
“I would say Isaac does not bring a high probability of prolonged [refining] outage. So, if prices are bid up prior to the storm, they will likely come right back down within a week to 10 days of it passing,” said Ken Medlock, a fellow in energy and resource economics at Rice University’s Baker Institute for Public Policy.
He similarly expects the offshore oil-and-gas production shut-ins to be short-lived.
This story was first posted at 12:15 p.m. and has been updated.
— Zack Colman contributed.
