DAMAGE IN THE ‘TENS OF BILLIONS’
Industries affected by Hurricane Harvey include refineries, oil and gas, shipping, travel, insurance, and banking
Flood damage from Harvey is likely to reach into the tens of billions and the storm is expected to cause the region’s economy to shrink, at least in the near term.
Harvey, which hit the US coast as a Category 4 hurricane, will likely affect the South Texas economy for months. Mark Zandi, chief economist at Moody’s Analytics, predicted that the region’s economic output will be cut about one percent, or $7 billion to $8 billion. It will recover, he said, helped by money from insurance payments and government aid to rebuild.
Prices are expected to spike over the next week or more as about 10 refineries representing more than 15 percent of the US’s refining capacity are shut down.
Nearly three million barrels of the 18 million US daily refining capacity has been knocked out, according to Goldman Sachs. Most of the shutdowns have been precautionary, with only a few reports of minor flooding.
But the slow-moving nature of the storm means it could cause shutdowns to linger and leave more lasting damage, said Goldman Sachs analyst Damien Courvalin. Another 850,000 barrels per day of capacity re- mains under threat, he said.
Oil and gas
Oil companies have removed workers from about 100 platforms in the Gulf of Mexico since late last week. About 19 percent of oil production in the Gulf has been stopped, but that is down from nearly 25 percent on Saturday, according to the US Bureau of Safety and Environmental Enforcement. The Gulf accounts for about onefifth of US oil production.
All major ports in the Houston and Corpus Christi areas remained closed Monday and might not open for several days.
That would affect barge shipments of gasoline to the East Coast — if refineries have resumed operating. Several large container ships that were headed to Houston anchored off Mexico or Louisiana to wait out the storm.
The ports can’t reopen until the US Coast Guard and ship pilots are confident shipping channels are clear and not obstructed by silt washed into bays by the heavy rain.
Houston’s two big airports are expected to remain closed to all but relief flights until later this week, with runways flooded and nearby roadways under water.
More than 1,600 flights on Monday were canceled, the bulk of them at Bush Intercontinental Airport and Hobby Airport, according to tracking service FlightAware.com.
The Federal Aviation Administration said Bush Intercontinental was expected to reopen Thursday and Hobby on Wednesday. Those targets might be optimistic. Bill Begley, a spokesman for the airports, said they would not reopen until officials are certain they’re safe, “and I don’t even want to put a deadline on that.”
Exceptions have been made for flights carrying people who were trapped at the airports when the storm hit.
AIR Worldwide, which advises companies on managing risk, estimates that Harvey caused between $1.2 billion and $2.3 billion in wind and storm damage. An- other analytical firm, CoreLogic, forecasts between $1 billion and $2 billion. Risk Management Solutions says it could be $6 billion, but likely much less.
Property damage from Harvey will likely be counted in the tens of billions of dollars, according to Moody’s Analytics, but much of the burden will fall on taxpayers.
Many businesses are flooded, including banks.
“In areas without power, it is back to a cash-only economy in terms of securing food, medical supplies and other necessities,” said Greg McBride, chief financial analyst at Bankrate.com.
Many banks and credit unions will set up mobile branches to let customers get cash or apply for loans, he said.
BRAVING THE DANGER. A driver works his way through fallen utility poles damaged by Hurricane Harvey.