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It rhymes with ‘schmurricane schmeason.’
The American oil refining business is a national colossus, with almost 130 facilities taking in some 16 million barrels of crude oil per day and turning it into nearly 10 million barrels of gasoline and 5 million barrels of diesel. And unlike some past years, inventories are looking pretty good heading into this summer. While they’re lower than the five-year average, gasoline supplies are still higher than where they were a year ago, and refineries are a ways away from running at their peak capacity. According to the forecasters at GasBuddy, we’re looking at relatively mild summertime prices of around $3.50 to $3.60 per gallon.
The one wild card: weather. About half of America’s refining capacity sits on the Gulf Coast, putting America’s fuel production squarely in the target zone of what could be an especially active hurricane season.
“If you recall 2022, inventories were tight and [refinery] utilization was tight,” explained Patrick De Haan, GasBuddy’s head of petroleum analysis. Gas prices peaked in June of 2022 at slightly over $5 per gallon, according to data the Energy Information Administration’s data, after the Russian invasion of Ukraine sent crude oil prices soaring to more $120 a barrel. “Our head is holding above water now,” he said, because demand is low. “We’re in a much better position going into the start of the summer compared to two years ago.”
Oil prices have largely stayed steady so far this year other than a brief spike in early April, despite continued attacks on shipping by Houthi rebels in Yemen and the ongoing threat of a spiraling regional conflict in the Middle East. The top gas price last month was around $3.67 a gallon, whereas GasBuddy’s range of possible prices for the summer months average closer to $3.60. All things considered, De Haan told me, “we got a little bit of breathing room.”
Morgan Stanley analysts wrote in a note to clients last week that gasoline stockpiles “remain close to the 5-year average level and are not drawing as strongly as usual for this time of year,” which puts downward pressure on prices. U.S. demand is hovering below 9 million barrels these days, which is right about the average demand in 2023, indicating that some consumer weakness may be responsible for relatively mild gas prices.
Weaker-than-expected demand for gasoline would be consistent with other signs of the American consumer being slightly less spendy in recent months. Overall retail sales in April were basically flat from the month before, according to Census Bureau data, and came in lower than economists’ expectations. Sales at gasoline stations were down 0.8% in the first four months of this year compared to the first four months of 2023, despite overall spending going up 3.5% from the same period a year ago.
What can be good for drivers may not be so great for investors and the gasoline complex at large. “It’s undeniable to say that there’s some trouble in gasoline land,” Rory Johnston, a commodities analyst and author of Commodity Context, told me. “In terms of whether it’s supply or demand more broadly, as always, it’s a bit of both.”
Whatever the cause, it will mean less profit for refiners, especially compared to the record outperformance they’ve seen in recent years.
“Gasoline prices and refining margins have come under pressure,” Reuters reported last week, meaning that refineries are making a bit less than before on the difference between crude oil and gasoline prices. Inventories are also being run down more slowly than is normal for the pre-summer season, the report said, “indicating supplies are plentiful, and undermining the bullish case for the fuel.”
And yet if it’s destructive enough, just one hurricane could upend that entire narrative. When Hurricane Harvey parked its torrential rains over Houston in 2017, it took a big chunk of the U.S. refinery complex offline, pushing gas prices up $0.36 in just two weeks.
While the National Oceanic and Atmospheric Administration has yet to release its official hurricane forecast for the year, The Weather Company has predicted that the 2024 season “could be one of the most active on record.” If those hurricanes hit the wrong parts of the Gulf Coast, the expected mild summer for America’s internal combustion-dependent drivers may be blown away.
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Ocean-based storms are increasingly affecting areas hundreds of miles from the coasts.
After a hurricane makes landfall comes the eerie wait for bad news. For Hurricane Helene — now a tropical storm as it barrels toward Nashville — that news came swiftly on Friday morning: at least 4 million are without power after the storm’s Thursday night arrival near Florida’s Big Bend region; more than 20 are dead in three states; and damage estimates are already in the billions of dollars.
But that’s just the news from the coasts.
As Helene is set to illustrate yet again, hurricanes are not just coastal events — especially in the era of our warming climate. The National Weather Service warned towns in the Blue Ridge Mountains of South Carolina and Georgia that Helene will be “one of the most significant weather events” in the region in “the modern era,” while the Appalachians are in store for a “catastrophic, historic flooding disaster” according to AccuWeather’s Chief Meteorologist Jonathan Porter during a briefing with reporters Friday morning. He added for good measure: “This is not the kind of language we use very often.”
Helene’s dangerous inland impacts are precisely what the National Oceanic and Atmospheric Administration sounded the alarm over earlier this year. Ninety percent of hurricane fatalities result from water, and almost 60% of those are freshwater deaths caused by heavy rainfall. Such fatalities often occur hundreds of miles from the shore in flash floods fueled by the warmer atmosphere, which can hold and dispense far more moisture in a short period than would have been possible in the pre-industrial era.
With Helene specifically, “there are going to be communities that are cut off” as bridges are compromised and roadways wash out, Porter said. Especially in mountain communities that might have only one or two ways in and out of town, that kind of rain raises the level of difficulty for any sort of emergency response and can make evacuation impossible. There have already been reports of 12 to 15 inches of rain in some parts of North Carolina.
“This is steep terrain,” Porter said. “When you get rain rates of 2 to 4 inches per hour, that is going to result in very significant flash flooding that can go from a dangerous situation to a life-threatening emergency over the matter of just a few minutes.” Rivers could exceed record levels by tonight, with more than 2 million under flash flood warnings around Raleigh and Fayetteville. Landslides are also a possibility in the mountains, where just 5 inches of rain from a single storm can be enough to trigger a disaster, the National Hurricane Center warned; two interstates near Asheville, North Carolina, are already closed due to slides.
It’s certainly not unheard of for the remnants of tropical storms to pass over the Carolinas and Appalachian Mountains — hurricanes such as Katrina in 2005 and Lee in 2011 were deadly billion-dollar disasters even as far inland as Tennessee. But as storms get bigger and wetter like Helene, “even people who have lived in a community for decades may see water flowing fast and rising rapidly in areas that they’ve never seen flood before,” Porter said.
It’s time to adjust expectations — and preparedness plans — accordingly. Louisiana, Texas, and Florida still stand for “Hurricane Country” in the popular imagination, but the mountain states of the southeast are rapidly joining that list. The National Hurricane Center is already monitoring a new low-pressure area in the Gulf of Mexico — in nearly the exact same spot that birthed Helene.
Helene’s winds stretch close to 500 miles across. That’s half the width of the entire Gulf of Mexico.
When Hurricane Helene began to take shape in the Gulf of Mexico, there was one factor that quickly made the storm stand out to meteorologists: its size. Helene is “unusually large,” the National Hurricane Center said; “exceptionally large,” per the Washington Post. Upon landfall, it was one of largest hurricanes in modern history, according to hurricane expert Michael Lowry — bigger than Harvey, bigger than Katrina, surpassed only by 2017’s Hurricane Irma, which was one of the costliest tropical storms on record and resulted in dozens of deaths.
Bigger does not always correlate to stronger. Discussions around the strength of a hurricane typically center on its wind speeds (which is what the categories connote) and the volume of rain it is expected to unleash. But in Helene’s case, there was both size and power — when the storm made landfall in Florida’s Big Bend region late Thursday night, it was classified as a Category 4 storm, with sustained winds of 140 miles per hour.
Florida Governor Ron DeSantis declared a state of emergency in 61 of the state’s 67 counties ahead of the storm, speaking to the breadth of damage he expects to see and the long recovery process to come. Already, images of flooded streets are circulating on social media, multiple deaths have been reported, and millions are without electricity. As Helene continues its course, it’s bringing tropical storm conditions to Alabama, Georgia, the Carolinas, and Tennessee.
In the hours and days to come, we’ll get a better understanding of how well forecasters did predicting the path and strength of this storm, a task that has become increasingly difficult. Because at the same time technology has improved oversight of these storms, with artificial intelligence models that have raised the bar for prediction accuracy and the ability to deploy radar systems as they pass overhead, climate change is altering the ingredients that feed their formation. For example, record-high temperatures in oceans have changed the behavior of storms as they form, Matt Lanza, who monitors Atlantic storm activity for The Eyewall, explained to me, resulting in more storms intensifying rapidly ahead of landfall. This has made storms like 2023’s Hurricane Idalia tougher to predict, despite being closely tracked.
Helene, too, rapidly intensified on its way to reaching land. The area of Florida where it hit, a little over 50 miles from the state capital in Tallahassee, is no stranger to storms— in just the past 13 months, Florida’s Big Bend has had to absorb the impacts of both Idalia and Hurricane Debby, each of which caused billions of dollars in damages. Still, Truchelut said Hurricane Helene could be a “truly unprecedented scenario for North Florida.” Part of the unusual force behind this storm can be attributed to another unprecedented scenario — the warmth of the water in the Gulf of Mexico. CBS News said the water surface temperature below the storm’s formation was up to 89 degrees Fahrenheit, which is as much as 4 degrees above average. This follows the overall Gulf warming trend observed by NOAA, which the agency says “increases the intensity of hurricanes.”
Another factor that allowed Helene to grow so huge so fast was the lack of wind shear, a term meteorologists use to refer to the way wind changes speed or direction or both across different elevations. Strong upper-level winds can inhibit storms from forming or growing. In Helene’s case, however, warm water was accompanied by low wind shear and plenty of moisture— conditions that aligned to provide tremendous energy for the storm’s formation. The only thing really standing in Helene’s way was its own size, Lanza noted, which would have made it more difficult for the storm to get organized and strengthen further.
The most obvious reason size matters is the footprint the storm will have on land. To give you an idea of just how large Helene is, Lowry said in his newsletter Friday that the full breadth of its winds upon landfall stretched over 450 miles across, nearly half the entire width of the Gulf of Mexico. This means the effects of the storm began long before it officially made landfall and will continue long after the eye of the storm has moved on.
Hours before Helene officially reached Florida, rain was already drenching communities in the storm’s projected path. Meanwhile, “Severe and life-threatening impacts from Helene will occur hundreds of miles from the cone confines, especially on the eastern half of the storm,” Florida meteorologist Ryan Truchelut wrote in the Tallahassee Democrat, summing up just how far-reaching Helene’s effects could be. The National Oceanic and Atmospheric Administration issued a self-described “rare news release” on Wednesday to warn of the potential for major flooding as far inland as Appalachia, some 300 miles from the Gulf Coast.
Another serious size-related consideration relates to the potential storm surge, or how far above average tides the water will rise. “When you have a storm this big, you're just inherently moving a lot of water over a broader area,” Lanza said. As Hurricane Helene’s eye approached Florida, water levels easily surpassed multiple storm surge records. But what stood out to Lanza was not just that the surge was powerful, it was also that the threat of surge was so widespread. “A much smaller storm, you can still have a very large storm surge, but it's going to be very isolated near to where it comes ashore,” he told me. “With a storm like Helene, because of its size, near and east of where it comes ashore, you're going to have a massive storm surge — and you're going to have a pretty big storm surge even down the coast from that.” The NHC warned that much of Florida’s Western coastline would see multiple feet of water.
Messaging the risks of these storms to an extreme weather-weary public is another challenge stemming from climate change. “Record breaking” has now become a familiar phrase for most of us, describing everything from extreme temperatures to rainfall rates. But as tropical storms become more intense, fueled by warming-influenced weather conditions, finding ways to accurately convey threats to the public is increasingly essential.
Ahead of Helene’s landfall, the NHC stressed that the storm surge would be “unsurvivable,” encouraging residents to heed evacuation orders. According to The New York Times, the warnings — paired with memories of those other recent storms — seemed to have worked, leaving Big Bend-area towns “eerily empty”. Even the local Waffle House, a business widely recognized for making its own assessments of hurricane risk, was shuttered on Thursday.
The NHC is experimenting with new graphics in hopes of better conveying risks outside of the classic “cone of uncertainty,” which illustrates the predicted path of a tropical storm’s eye. The center shared an image on social media showing inland risks from storms, not just those along the coast.
So if you noticed the NHC’s risk map for Hurricane Helene colored the entire state in a palette of watches and warnings, the reason why is twofold: Yes, the risks really are that widespread with this storm, but the agency is also trying to get better at telling you about them. And in the case of major hurricane like Helene, the more warning, the better.
On getting corporate buy-in, affordable EVs, and the return of the Chevy Bolt
I spoke with Kristen Siemen, General Motors’ chief sustainability officer, as her fellow Michiganders were reeling from another late summer day of violent thunderstorms, extreme summer heat, tornado and hail warnings, school closings, and damaging wind gusts that left 365,000 homes and businesses without power.
In the race against climate change, Siemen feels the pressure for GM to reach its goal to be carbon neutral in its products and operations by 2040, despite lowering its production target for electric vehicles this year to 200,000 to 250,000 vehicles (down from 200,000 to 300,000) and backtracking on its plans to produce a million EVs next year. The 31-year GM veteran started her career as an engineer.
This interview has been edited for length and clarity.
How bad was last night?
I was texting all night and into this morning, checking in on my staff and whether they have power at their homes and whether we’re able to operate our facilities. Unfortunately, these big storms are happening more and more frequently and it’s getting harder for our grid to reliably and consistently provide energy for all of the things we're trying to do. And this isn’t just a U.S. problem.
How worried are you about the idea that there’s a slowdown in EV sales?
There’s no doubt that the acceleration has not happened as quickly as was predicted. But that doesn't mean that the EV segment isn’t growing. It’s still a huge growth opportunity. We've got a lot of products covering a lot of segments that weren't available before, everything from the affordable Equinox EV to full-size trucks with the Silverado and a luxury vehicle with the Cadillac Lyric. And obviously the supertruck Hummer.
Which new EV model do you think will do the best?
I have two favorites and I've driven them all. I actually was in the Cadillac Lyric for quite a while, and it’s, by far, the best vehicle I've ever driven, based on performance and luxury features. Just absolutely loved the product.
And then the Equinox EV. To get a family sized SUV that starts at $35,000 and you add in the tax incentives, you're talking under $30,000 for an EV for a family. That’s a game changer, to be able to have something that's affordable. It's a fantastic product with incredible range, great performance, and all the features that you can imagine. These are the things that will really open the doors for people that maybe couldn't or weren't considering an EV in the past.
What else do you worry about?
I worry about the stability of our country's infrastructure, particularly the grid. We need to more reliably and consistently provide energy for all of the things we're trying to do to make the energy transition a reality. And we have a long way to go.
What about a lack of EV charging infrastructure?
If you go on a long road trip and you drive through areas that don't have public EV charging stations, it's a little unnerving. People need to see more charging stations in their daily lives — like we’re used to seeing a gas station on every corner. The more people that can see that EV charging stations are readily available, even though they probably will use one rarely, they just want to know it's there. It gives that sense of comfort that it's available. And charging at home isn’t feasible for everybody, particularly in urban areas. So it's going to be important to see that our customers see more charging infrastructure when they are out and about.
How are you feeling about Plug-In Hybrids (PHEVs)?
As long as consumers have concerns over the charging infrastructure, PHEVs are going to help bridge that gap for customers that either aren't ready or aren't able to make the full transition to an EV. But from a chief sustainability officer’s perspective, the only way we get to zero is by charging with green energy. And so we want that transition to happen as quickly as it possibly can.
What did GM learn from its Bolt experience and what do you expect from the new Bolt due out in late 2025?
The Bolt was a terrific product. And the customer base was extremely passionate, extremely loyal, and probably the highest customer satisfaction score of some vehicles ever, not just at GM. So for the new Bolt, we're going to build on that equity and that passion that we've had and do it as efficiently as possible.
We really needed to transition, and that's what we're doing. The new Bolt EV will be on the new Ultium battery platform, and so it'll be profitable and an affordable EV. We heard a lot from Bolt customers and that passion is certainly something that drives us.
Any advice for all the sustainability executives out here who are having a hard time getting traction within their companies?
When I first got the phone call to take this role, my first question was, why me? You know, I don't have a sustainability background, I’m not sure what I can contribute.
But in reality, knowing the business has been a huge advantage to be able to communicate and understand all the challenges to being a chief sustainability officer. I know how long it takes to put a product into production. I know all of the things that an engineer needs to balance around cost and quality and performance.
So I tell other CSOs to meet [their C-suite colleagues and stakeholders] where they're at. Talk to the CEO about how making the company more sustainable means making the company more resilient and stronger for the future, ensuring that we have a positive impact on the world. Educate the CFO on how all this saves money. When you look at the things we’re doing from an environmental or health and safety standpoint, they're just good for people. It's about doing the right thing. So it doesn't even have to be a debate over climate change, right?
How does that dynamic work within GM?
Saving energy, saving water, those save costs. And there isn't anybody who disagrees with saving costs.
Now, there are some things that we may want to do today, but we just can't justify it. Some of our largest challenges are in our assembly plants, around things like heating and cooling and with our paint ovens. Even if we had the capital, or wanted to allocate the capital, to make those transitions today to electric, it really doesn't make sense in every case, because natural gas is really cheap.
And so we need to focus instead on, how do we make what we do more efficient? How do we use less resources? How do we continue to make our manufacturing processes more efficient and make sure that we're allocating our resources, our capital, our investments in the places that we can make the biggest impact today? And then prepare ourselves for when this transition is more readily available.
What other companies do you admire for their work in sustainability?
One of the things I love about this job is really the collaboration. The CSO space is a very friendly space. We're all trying to work on the same issues, right? It's a very unique situation where you all have the same challenges, regardless of what your company does, and so it's extremely collaborative.
There are a lot of companies just doing incredible work in sustainability. I’ve spent time recently with the CSO of Colgate-Palmolive and one of their big wins this year was developing a recyclable toothpaste tube. What’s really cool about their story is that they made [their IP] available for everyone. We've also had conversations with Nike and Lululemon around materials. It’s a good opportunity for us to come up with solutions together. And we’re working with the tech companies too, Google, Amazon, Microsoft.
Partnering with NGOs has also been helpful, working on everything from how to purchase renewable energy, including virtual power plants, and how you take advantage of all those EVs out there that can help generate power for days like today when so many people have lost power.