Hurricane Gustav may not have shaken up oil markets in the end, but it taught traders a lesson for next time: The oil infrastructure of rigs and platforms dotting the Gulf Coast can handle a Category 3 storm.
James Cordier, an oil futures trader in Tampa, said minimal damage from Gustav and decreasing global demand gave investors the confidence they lacked in the wake of the hurricanes of 2005.
Before Gustav, "every time a storm came out, the energy market cringed," Cordier said. "People are really breathing a sigh of relief that we withstood a Category 3 without damage."
Crude oil futures closed at $109.71 a barrel Tuesday on the New York Mercantile Exchange, falling $5.75. Gas prices stayed steady at $3.684 average for regular unleaded nationwide and $3.63 in the Tampa Bay area, according to AAA.
As of late Tuesday, all gulf rigs and about 12 percent of refineries remained shut down as workers surveyed the damage. Risk Management Solutions Inc. estimated oil-drilling damage from the storm could total $1-billion to $3-billion.
David Mica, director of the Florida Petroleum Council, said the industry remains optimistic, but it's too early to tell if or how the shutdowns will have a delayed effect on gasoline prices in Florida.
"There is now a burp in the system, and how big and how long that burp is we'll have to wait and see," he said.
Unlike hurricanes Rita and Katrina, which hit the Gulf Coast as Category 3 storms, respectively, in 2005, Gustav entered the gulf as a Category 3 and was barely a Category 2 when it made landfall Monday west of New Orleans.
Mica said rigs and platforms have been reinforced with structural moorings, better bolts and stronger steel since the 2005 storms, when flooding also caused severe damage to other infrastructure such as refineries and pipelines.