Heat wave could cost state nearly $10B
Report: Industries seeing productivity slumping
The extreme heat baking Texas since June could cost the state almost $10 billion in gross domestic product over the course of the summer, according to an economic analysis.
An analysis by Waco consultancy The Perryman Group found that productivity among most industries is declining as workers — even those accustomed to Texas’ brutal summers — battle unrelenting heat. Average daily temperatures are running about 2.6 degrees higher than the state’s long-term average since the summer began.
“Most of it is fewer hours, more breaks, more absenteeism for health reasons, and similar phenomena,” said Ray Perryman, an economist and head of The Perryman Group, in an email.
Agriculture and the power sector are affected the most but in opposite ways. The heat is pushing growth in agriculture down 5.7 percent since the summer began, which will contribute to a projected $3.91 billion in losses for the financial sector, as crop insurance costs and payouts rise. Conversely, power companies are poised to bring in $461.6 million in additional revenue if similar weather conditions persist into August.
Still, The Perryman Group found, the net loss to the state’s real gross product could work out to $9.55 billion over the course of the summer.
Likewise, Houston workers and business owners are also feeling the heat.
Nicole Buergers, founder of the Bee2Bee Honey Collective, says the temperatures aren’t having too much of an effect on her bottom line because production always slows at this time of year.
“There is less nectar available, because when it’s superhot, the flowers keep most of the nectar for themselves — but that’s com
mon every summer,” she said Tuesday morning.
But this summer has been unpleasant for bees and beekeepers, who, like others who toil outdoors — construction workers and landscapers, for example — must take extra precautions. Inside the suits beekeepers wear for safety, it can be 20 degrees warmer than the atmospheric temperature, requiring workers to take frequent water breaks and electrolyte tablets, and to work earlier in the day, Buergers said. And the bees react to extreme heat much as humans do: They become grumpy, cranky and easier to agitate.
“They definitely have been pretty annoyed this summer,” Buergers said. “This is coming from someone who got stung on the lip today.”
The economic effects trickle down to consumers as Houstonians are seeing dramatic spikes in utility bills that are squeezing household finances just as the past year’s persistent inflation finally cooled.
The extreme heat has pushed up household energy consumption, despite calls to conserve power during periods of peak demand.
And an unusually dry July has residents watering grass, gardens, trees and other plants. Rising water consumption comes on the heels of a Houston Public Works announcement in April that rates would increase by as much as 17.5 percent to account for inflation, population growth and infrastructure maintenance. In addition, an effort to recoup some payments for water stemming from malfunctioning meters means some customers have been hit with staggering and unexpected monthly bills.
These anomalous expenses have led many Texans to cut discretionary spending as the heat wave persists, Perryman found.
“There is higher demand for cooling devices, air conditioning repair services, bottled water and other items to cope with the situation, but that is more than offset by the effects of higher utility bills and other costs,” Perryman said. “The analysis showed a net loss in retail sales of about $646 million during the three-month period, relative to summer with normal temperatures.”
The analysis also forecasts even “larger and more profound economic consequences” for the state in coming years if Texas continues to experience temperatures at least one degree higher than the historical average.
“Our baseline forecast for real gross state product in 2050 is about $4.288 trillion and with the higher temperatures it falls to about $3.892 trillion,” Perryman said. “The difference is about $396 billion.”