Storm Effect on Oil Prices Waning as Shale Booms: Energy Markets

The power of hurricanes to drive up oil prices is diminishing as the proportion of U.S. crude coming from the Gulf of Mexico falls to a 14-year low because of the increase in onshore shale production.

Oil prices were little changed in the week ended Aug. 31 even as more than 90 percent of Gulf capacity was shut for five consecutive days with Hurricane Isaac hitting the region. Oil jumped 44 percent in 2008 during Hurricane Ike and 14 percent in 2005 when Katrina devastated the Gulf Coast. Crude inventories rose a week after Isaac made landfall in Louisiana while Katrina cut stockpiles for six straight weeks.