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How Does a Refinery Explosion Affect Oil Futures?

Posted on October 25, 2022 in

Millions of barrels of oil are processed each and every day in U.S. refineries. Oil processing in refineries necessitates the use of hazardous chemicals of different types, extremely high temperatures, and extraordinary pressure. Oil refineries are at risk for catastrophic explosions that result in traumatic injuries and wrongful deaths. In addition, oil refinery explosions can negatively impact the oil futures market. There are four primary ways in which an oil refinery explosion adversely impacts the future market:

· Concerns over short term production stoppage or slow down

· Supply shortages that impact the consumer market

· Effect on industry confidence

· Potential for heightened regulation

We explore each of these four ways in which oil futures can be impacted as a result of a refinery explosion. Bear in mind that in some instances, oil futures are impacted after this type of incident as a result of interplay between each of the four types of aftermath impacts we discuss in this article.

Concerns Over Short Term Production Stoppage or Slow Down

A fundamental way in which a refinery explosion affects oil futures is rooted in legitimate concerns over short term production stoppage or slow down. There are oil refineries in Texas and Louisiana that are so massive that an explosion can result in a production stoppage or slow down with the potential for a disproportionate impact on the market more broadly and, as a consequence, oil futures themselves.

Supply Shortages that Impact the Consumer Market

Depending on the specific oil refinery where an explosion occurred, the net effect of the incident can be a disruption of the vital fuel supply chain which impacts the consumer market. Disruptions of this nature can cause what sometimes fairly can be classified as upheaval in the consumer market. The consumer market includes not only motorists and homeowners but (significantly) manufacturers and other commercial users of products from oil refineries.

Effect on Industry Confidence

Industry confidence can be rattled (and sometimes markedly so) in the direct aftermath of an oil refinery explosion. The underlying basis for industry confidence being rattled or even rocked stems in part from the other likely impacts of an explosion on oil futures mentioned in this article.

Following a refinery blast, industry confidence can be and oftentimes is unsettled by other concerns that include:

· Questions about the state of oil refinery and oil industry infrastructure

· Added pressure put on governmental entities, vehicle manufacturers, and others to move more quickly towards renewable energy resources

Potential for Heightened Regulation

An upshot of nearly every more significant oil refinery explosion is a call for heightened or increased regulation. In some instances, there are some regulatory adjustments that do occur following an industrial explosion of this nature. However, in the past few decades, the hue and cry about regulatory alterations following an oil refinery explosion has not proportionally translated into new or stiffer rules and policies overall.

This is a function of a number of factors that include the transitory nature of the 24-hour news cycle, the strength of the oil and gas industry, and consumer demand for reliable and readily available energy resources.

Protect Your Rights with a Skilled Refinery Explosion Lawyer

If you have been injured in an oil refinery explosion, or if you’ve lost a family member in this type of catastrophe, the skilled, committed, experienced legal team at The Doan Law Firm is here for you. You can connect with a refinery explosion lawyer at our firm any by falling us at (800) 349-0000. We can schedule a no-cost and no-obligation initial consultation with a refinery explosion lawyer at any one of our 40 offices located in Texas and across the country as well as through an online case evaluation.

The Doan Law Firm makes an attorney fee guarantee: Our firm will never charge an attorney fee unless we win your case for you.