DAM­AGE IN THE ‘TENS OF BIL­LIONS’

In­dus­tries af­fected by Hur­ri­cane Har­vey in­clude re­finer­ies, oil and gas, ship­ping, travel, in­sur­ance, and banking

Sun.Star Cebu - - BUSINESS - DAVID KOENIG / AP Busi­ness Writer

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.

Re­fin­ing

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.

Ship­ping

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.

Travel

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.

In­sur­ance

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.

Banking

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.

AP FOTO

BRAV­ING THE DAN­GER. A driver works his way through fallen util­ity poles dam­aged by Hur­ri­cane Har­vey.

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