The cumulative effects of two major hurricanes striking the U.S. Gulf coast in September continued to be quantified. In a Supply Chain Matters post in late September, I highlighted some preliminary estimates of the effects to energy and petrochemical supply chains.  The latest quantification is provided by a posting in Bulk Transporter, which cites a monthly statistical report from the American Petroleum Institute.  The bottom-line indicator is that crude oil production suffered its largest disruption since occurrences of Hurricanes Katrina and Rita in the New Orleans and Gulf regions in 2005.

Highlights of overall disruption include:

  • A production disruption of an estimated 32 million barrels of crude oil refining, and 164 billion cubic feet of natural gas for the month of September.  This curtailment of production, coupled with cut-backs of demand from consumers, placed U.S. product deliveries at their lowest third-quarter levels in ten years.
  • As penned in our initial postings, the cumulative effects of the two hurricanes also hindered the inbound delivery of foreign crude oil to Gulf Coast ports.  Crude oil imports fell nearly 13 percent to less than nine million barrels per day.  September’s input to crude distillation units fell to its lowest level in 16 years. Since inbound stocks also make their way into petrochemical-related supply chains, the effects of this disruption in that area are still playing out.
  • The storm aftereffects to disruptions in the supply of electricity, clean water, and other infrastructure hindered a quick recovery for many of the large production complexes.
  • Fulfilling overall product demand was buffered from existing supplies, with four millions barrels of crude oil, more than six million barrels of gasoline, and five million barrels of distillates drawn from existing inventory throughout the region.

The increased occurrence of worldwide natural disasters provides us continuous reminders that supply chain disruption is a given reality for managing global supply chains.  It’s no longer about the context of “if”, but rather “when” such incidents occur, will our company be prepared.

 Bob Ferrari