HARVEY TO TAKE TOLL ON GAS PRICES,
Refinery production halted
Hurricane Harvey’s deluge has halted production at nearly a dozen oil refineries on the Texas coast, sending gas prices up across the country, with the storm expected to inflict $30 billion in damage by the time the rain stops falling.
“The big issue is going to be the energy sector, that’s the one everyone’s worried about,” said Chuck Watson, a disaster expert with Enki Research. “The gas price spike is probably going to be short-lived and temporary, but if one of those refineries gets damaged, that could be another story.”
The Gulf Coast has nearly half of all refinery capacity in the country, and any prolonged shutdown could send gas prices soaring. In the early days of the storm, analysts said prices could rise by as much as 25 cents per gallon. Gasoline futures rose 4 percent in trading yesterday. Oil prices fell yesterday due to falling demand from refineries.
There have been no reports of damage at any of the refineries, but ongoing rain and flooding have made it impossible to assess damage completely. Watson said damaged refineries could take a month before coming back online.
In Massachusetts, gas prices have only risen by 2 cents compared to a week ago, AAA Northeast said.
“In spite of the havoc wreaked on Gulf Coast oil refineries by Hurricane Harvey this weekend, gas prices in the Northeast have remained relatively stable since Friday,” said Mary Maguire, a spokeswoman for AAA Northeast. “Whether that trend continues, of course, depends on how quickly refineries are able to resume normal production.”
Yesterday, insurance forecasters said Harvey could result in as much as $2.3 billion in payouts from insurance companies. Still, homeowners insurance doesn’t cover flood and rain damage, and will likely only cover a small fraction of the damage. Flood damage is covered only by the national flood insurance program, which is mandatory for homeowners close to the ocean. Still, only a small percentage of Houston-area homeowners have flood insurance. The Insurance Council of Texas estimates 20 percent of homes are covered.
The total damage could be $30 billion, according to Watson.
Both Bush Intercontinental Airport and Hobby Airport remain closed, officials said, and more than 1,600 flights were canceled yesterday, according to flight tracking firm FlightAware. com. Both airports are expected to remain closed until at least Wednesday.
Experts have said Harvey is not expected to have significant nationwide economic impacts beyond gas prices.
Houston is the nation’s fourthlargest city, with an estimated 2016 population of 2.3 million people, according to the U.S. Census Bureau.