RBC Capital put out a report on the hurricane season that officially starts June 1. The estimates for this year are that there will be 14 named storms, 7 will be hurricanes and 3 of those will be category 3 or better. The long term average for hurricanes in the Gulf of Mexico is 11 named storms, 6 hurricanes and 3 of category 3 intensity or higher. The Gulf accounts for a quarter of U.S. crude oil production and 14% of natural gas. That works out to be 1.3 million barrels of oil a day and 8 bcf of gas. Also, about a third of domestic refinery capacity is located along the Gulf.
If this report is right, $4 gas may look cheap.