Hurricane Harvey nears Texas coast
DALLAS — Refinery operators along the Texas Gulf Coast are hunkering down for hurricane Harvey, while motorists far from the storm’s path are also feeling the effects as gasoline prices rise.
Nearly one-third of the nation’s refining capacity sits in low-lying areas along the coast from Corpus Christi, Texas, to Lake Charles, La.
Several refineries at greatest risk of suffering a direct strike from high winds have already shut down, but it is the potential for flooding in the Houston and Beaumont, Texas, areas that could really pinch gasoline supplies.
Other industries from shipping to air travel are also seeing the impact of the first major hurricane to hit the refinery-rich Texas coast in nearly a decade.
Here’s how Harvey is likely to affect energy, travel, shipping and other industries.
Refineries: The hurricane is expected to make landfall Friday night or early Saturday, but Flint Hills Resources already announced that it would shutter a refinery and Valero Energy Corp. said it was closing two facilities in Corpus Christi.
Tom Kloza, an analyst for the Oil Price Information Service, predicts that prices could rise by up to 25 cents a gallon, but an increase of five cents to 15 cents is more likely, assuming that the hurricane doesn’t cause lasting damage to refineries.
Andy Lipow, president of consultant Lipow Oil Associates, expects prices to rise 10 cents a gallon for motorists east of the Rockies.
Oil and gas: Companies have been removing workers from oil-producing platforms in the Gulf of Mexico, and that is crimping the flow of oil and gas.
As of midday Friday, the U.S. Bureau of Safety and Environmental Enforcement said workers had been removed from 86 of the 737 manned platforms used to pump oil and gas from beneath the Gulf.
The agency estimated that platforms accounting for about 22 per cent of oil production and 23 per cent of natural gas output in the Gulf had been shut down.
Shipping: Rates for carrying freight between the Gulf of Mexico and the U.S. East Coast rose.
Travel: On Friday, American Airlines, Southwest and United scrubbed all flights out of Corpus Christi until Monday, according to an airport official.
By late Friday afternoon, more than 100 flights to and from Houston airports were also cancelled and conditions were expected to worsen over the weekend. About one-third of all Saturday flights were already cancelled at Hobby Airport, where Southwest is the dominant carrier. A Southwest spokesperson said the airline expected to run a full Houston schedule on Sunday.
Airlines were offering customers the chance to reschedule trips that would take them to Houston, San Antonio or Austin from Friday through the weekend.
Utilities: Researchers at Texas A&M University estimated that the storm will knock out power for at least 1.25 million people in Texas. They said the hardest-hit areas will include Corpus Christi, which is on the coast, and San Antonio, which is about 225 kilometres 140 miles inland.
Insurance: A firm that does forecasts for insurance companies says wind-damage claims could top $6 billion US, although it says that losses in the low billions are more likely.
Risk Management Solutions Inc. said losses from storm surges and inland flooding could be a bigger source of losses. If the firm is correct, that would put homeowners and the governmentbacked National Flood Insurance Program at risk.
The flood program is run by the Federal Emergency Management Agency, which owes the Treasury about $23 billion US in funds borrowed to cover the cost of past disasters, according to a recent report by the U.S. Government Accountability Office.