Damage from Hurricane Harvey is expected to total tens of billions of dollars. Current estimates range from $20 billion to $40 billion, but only one in six have insurance.
Bloomberg reports Harvey’s Cost Reaches Catastrophe as Modelers See Many Uninsured.
Hurricane Harvey’s second act across southern Texas is turning into an economic catastrophe — with damages likely to stretch into tens of billions of dollars and an unusually large share of victims lacking adequate insurance, according to early estimates.
Harvey’s cost could mount to $24 billion when including the impact of relentless flooding on the labor force, power grid, transportation and other elements that support the region’s energy sector, Chuck Watson, a disaster modeler with Enki Research, said by phone on Sunday. That would place it among the top eight hurricanes to ever strike the U.S.
“A historic event is currently unfolding in Texas,” Aon Plc wrote in an alert to clients. “It will take weeks until the full scope and magnitude of the damage is realized,” and already it’s clear that “an abnormally high portion of economic damage caused by flooding will not be covered,” the insurance broker said.
Researchers were shifting from examining Harvey’s landfall Friday as a roof-lifting category 4 hurricane to the havoc it later created inland as a tropical storm. Typical insurance policies cover wind but not flooding, which often proves costlier. Blaming one or the other takes time.
15% of Refining Capacity Down
The Wall Street Journal reports Energy Firms Brace for Harvey Fallout.
Harvey knocked almost 15% of U.S. refinery capacity out of commission, which threatens to boost fuel prices across the country.
Energy markets could be in for a bumpy ride when they open Monday as investors try to gauge the impact of the disruption. After slamming into Texas on Friday and causing massive flooding in Houston over the weekend, the storm was moving east on Sunday toward a refining hub near the Louisiana border. That could shut down even more of the U.S. energy infrastructure.
Gasoline futures jumped in electronic trading Sunday evening, rising 10.25 cents, or 6.2%, to $1.7691 a gallon on the New York Mercantile Exchange. U.S. crude futures slid from gains to slight losses, trading down 10 cents, or 0.2%, at $47.77 a barrel.
Exxon Mobil Corp. closed its Baytown refinery, located on the Houston Ship Channel, when floodwaters paralyzed large portions of the area after Harvey was downgraded to a tropical storm from a hurricane.
The plant is the second-largest refinery in the country, processing as much as 560,000 barrels of oil a day and feeding fuel into pipelines and barges that move it across the southeastern U.S. and up the East Coast.
Harvey’s projected path as of Sunday night included an even bigger refinery in Port Arthur, Texas, that is owned by Saudi Arabian Oil Co. and produces 600,000 barrels of fuel a day.
Phillips 66, which shut down its refinery in Old Ocean, Texas, 65 miles south of Houston, said it would provide as much fuel as possible from other plants and fuel-storage tanks. It urged gas stations not to unfairly hike prices.
All the refineries in the hard-hit Corpus Christi, Texas, area are closed, so the additional shutdowns in the Houston area are likely to deepen concerns about the possibility of fuel shortages. Harvey’s overall toll on fuel-making capacity is estimated to be at least 2.2 million barrels a day.
Previous storms that hit the Gulf Coast caused crude prices to rise by 4% and 6%. During Katrina, gasoline prices soared by as much as 70 cents a gallon immediately after the storm, and shortages lingered for days.
Gasoline Futures Jump
Reuters reports Gasoline Futures Surge as Harvey Swamps Texas
However, such gains are typically given back quickly. Futures prices are already below where they were on Friday.
Mike “Mish” Shedlock