Gas prices are vulnerable to a disastrous spike this summer as a busy hurricane season could intensify a US energy crunch

Reduced fuel-making capacities around the world are putting more pressure on global supplies, and refinery are still recovering from the effects of the Pandemic, just as this year's Hurricane season gets under way

According to the EIA, almost half of the US refining capacity is located along the Gulf Coast, and if the area is struck by extreme weather, it could cause disaster.

If severe weather causes a significant chunk of refining capacity to go offline in Texas and Louisiana, the US could run out of certain fuels, according to analysts from JP Morgan.

If a storm hits the gulf coast this year, there is a high chance we will experience shortages and this will cause continued rise in prices.

Crude oil prices hit a two-month high of $123 this week after the European Union imposed a partial ban on Russian supplies.

Ahead of the summer travel season, consumer demand for gas and diesel is returning to pre-pandemic levels, and fuel-making refineries are facing dwindling inventories even as they run near maximum capacity

The highest levels in the last five years have been achieved by upwards of 90 percent of the refinery's capacity. More than one million barrels a day are gone from the global market because of sanctions on Russia.

Diesel, jet fuel, and natural gas have all gone up in price because of these factors, and the US average hit a record $4.761 per gallon on Friday.

In May, US diesel inventories hit their lowest level in 17 years, and US gasoline inventories are 8% lower than normal.

It would take at least two to four years to bring the refinery back online if it were to be shut down by a storm.

Jim Mitchell is the head of Americas oil analysts at Refinitiv. Nobody is going to be short on fuel.

Three million barrels a day of global refining capacity closed during the Pandemic, and a third of that happened in the US, according to JP Morgan. According to analysts, another 1.69 million barrels of US refining capacity is expected to disappear.

Products can get anywhere if inventories are high. There's a buffer of security of supply with inventories. The probability of price rationing increases when the buffer drops.

The impact a busy Hurricane season could have on fuel prices could be dramatic.

If the Gulf Coast was shut down for an extended period of time, it would cause a reduction in the region's ability to send products to the Northeast and Latin America. There could be spikes in the price at the pump.

If the Gulf Coast ports are shut down due to extreme weather, there will be shortages.

"This would cause inventory to build in the Gulf Coast, but would cause global panic and pricing to go up around the world," he said. He said that if all these factors happen, crude and product prices could go up 10%- 20%.

There will be more supply shortages if a significant refining area is hit by a storm.