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
1. Some people think this is a great thing to happen – rebuilding helps the economy no matter what.
2. People without insurance will demand a bailout. And sue FEMA for efforts if they don’t like something (like trailers). Minority racists will blame the federal government for a “racist” response no matter what happens
3. People will continue to build on flood plains as long a the federal government subsides flood insurance. And then demand a bailout.
4. The ACLU is upset because Texas didn’t take down checkpoints looking for illegals. That is what they care about.
5. The fake legacy media will blame Trump for anything to do with Harvey for the next few years and will claim racism. Obama went golfing and they didn’t care…
6. Despite nearly six years without a major Hurricane, global warming marxists will blame global warming and demand bigger government and more taxes.
7. Feel free to add your own predictions…
Meanwhile – America without any help from the outside world will rescue their own and rebuild.
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8. The federal debt ceiling will be raised.
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“Some people think this is a great thing to happen – rebuilding helps the economy no matter what.”
Parable of the broken window
The parable of the broken window was introduced by Frédéric Bastiat in his 1850 essay “That Which Is Seen and That Which Is Not Seen” to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
Also, just as buying on credit hampers future spending by moving demand from the future to today, same for this.
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“Despite nearly six years without a major Hurricane…”
Make that a new record 12 years without a major hurricane.
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8. Fed should be happy, as they will get a burst of price inflation.
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[lol] Trump still batting 1000!
========
Trump to Roll Back Obama’s Flood Standards for Infrastructure
AUG. 15, 2017
President Trump will sign an executive order on Tuesday to roll back standards that demanded the federal government account for climate change and sea-level rise when building new infrastructure, the White House confirmed.
The move is the latest effort by the Trump administration to unravel former President Barack Obama’s climate change agenda. It comes as Mr. Trump meets with top aides in New York to discuss plans for a sweeping infrastructure package, an effort that has taken a back seat in Congress to issues like health care.
Building trade groups and Republican lawmakers had criticized the Federal Flood Risk Management Standard, established by Mr. Obama in an executive order in 2015, as costly and overly burdensome.
But environmental activists, floodplain managers and some conservatives had urged the Trump administration to preserve the rule, arguing that it protected critical infrastructure and taxpayer dollars by ensuring new projects in areas prone to flooding were safeguarded.
“The Trump administration’s decision to overturn this is a disaster for taxpayers and the environment,” said Eli Lehrer, president of the R Street Institute, a free-market think tank in Washington. He described the Obama order as a common-sense measure to prevent taxpayer dollars from being sunk into projects threatened by flooding.
….
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Do you have a point?
Obama – in his SEVENTH YEAR of his regime, decided to ORDER these hugely expensive regulations (that did not even go into effect until obama left office) for the next president to deal with.
If these regulations are so great and so common sense – why didn’t obama make this a LAW when democrats had a super-majority in the house and a filibuster proof senate?
Why did he wait until he left office?
and BTW – cities and states are free to impose more stringent standards.
“A White House official said that Mr. Trump’s executive order would reinstate the prior flood management standard, issued by President Jimmy Carter in 1977, but that it would not prohibit state and local agencies from using more stringent standards if they chose.”
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No reasonable amount of flood prep could have helped with 50 inches of rain. Also, until you can prove that it will be cheaper to prevent an UNCERTAIN climate change than adapt to it, GO AWAY. Trouble is, no one can because the error bars in both the climate models and the equally untrustworthy economic models are FAR too large.
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Netherlands working towards preventing all but a 10,000 YEAR FLOOD in densely populated areas (4,000 years in the less populated areas).
Compare that with interview of a Houston man that has experienced 3 floods in the last 3 years, that now plans to move.
As a general rule, an ounce of prevention is worth a pound of cure.
But believe what you want.
Everyone does.
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“As a general rule, an ounce of prevention is worth a pound of cure.”
Only in areas of great certainty. Once you introduce uncertainty, it’s much more efficient to follow Kent Beck’s dictum of doing the simplest thing that could possibly work. Then only add to it, once it is clear that it could no longer possibly work.
Building your Jackson, WY home to withstand a massive Yellowstone Caldera eruption, as “prevention”, is simply prohibitive. As is meteor strike reinforcing the roof of your house anywhere else. And floor proofing your Bedouin tent in the middle of the Sahara.
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“Only in areas of great certainty.” —Stuki Moi
Hence the preface: “As a general rule”.
And more to the point: Houston flooding IS a great certainty:
“Over the PAST FORTY YEARS, Houston has had MORE FLOODS THAN ANY OTHER MAJOR CITY in the United States.”
Last quote from “Capitalism and the Houston flood catastrophe”
https://www.wsws.org/en/articles/2017/08/28/pers-a28.html
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Per my standards, I would tend to agree with you wrt Houston. I wouldn’t live on a floodplain like that, without taking precautions. And neither am I too keen on subsidizing those who don’t, by providing masses of funding extorted from more prudent folk, every time someone get dunked by an entirely predictable flood.
My beef is with the current fascination for making extreme risk awareness, and designing to every conceivable, however unlikely, event, a largely mandated norm.
The West was won by people just going there on a hope and a whim. Betting their general competence and adaptability would see them through. Not by “signing off” on every possible risk before they were allowed to leave. And certainly not by forcing every Indian to take out “liability insurance,” so that the ambulance chasers had some deeper pockets to gorge themselves on, should one of the Go-West’ers end up with an arrow in the back.
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“As a general rule, an ounce of prevention is worth a pound of cure.”
Stuki Moi did a great job of answering that, but I’ll simplify it, something I thought I’d adequately done in my original post – that is true ONLY if one knows the extent and certainty of what one is preventing, the cost of the cure and whether in fact what is done IS in fact the cure.
And, oh my, let us mourn the Paris Accords -BAD JOKE- which primarily hampered the USA economically:
“As you know, China did not have to take any steps of compliance until 2030. India had no obligations until USD 2.5 trillion of aid was provided,” Scott Pruitt, administrator of Environmental Protection Agency (EPA) told reporters at a White House news conference.
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“President Trump will sign an executive order on Tuesday to roll back standards that demanded the federal government account for climate change and sea-level rise when building new infrastructure, the White House confirmed.”
Santa Monica beach looks just like it was when i first saw it in 1971.
New York City is built on the site of an ancient glacier. Everything in New York State is. They never took climate change into account.
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Why is the federal government meddling in building codes anyway? Does that mean we’re applying a national standard for home construction? Do I have to build my Colorado dream home (elevation 8200 ft MSL) to withstand a hurricane?
Real estate is local. No reason to apply national standards to a local problem.
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Check out the construction in coastal areas in general. Older houses in low or coastal areas were simple affairs constructed of cinder block or mobile homes, small and cheaply built – excellent for summer vacations.
The newer houses in these areas are large and expensive and very costly to replace. The new houses are also placed on lower less secure lots as well. Only way to make them practical is with subsidized federal flood insurance.
70 years ago people had some sense and anticipated that the vacation house would eventually wash away and made them somewhat disposable. Save up a few hundred dollars and buy more cinder blocks to rebuild and you would be ready for more fun at the beach.
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THIS might be a good time to declare that the FLOOD INSURANCE you are buying will no longer be subsidized by tax dollars. Yes, we’ll help pay for THIS house/building.
But NO MORE on this piece of land. Any rebuilding will NOT be covered by tax subsidy. Starting NOW. You can buy flood insurance – but NOT TAX SUBSIDIZED.
People on the plains of Kansas should NOT be paying to subsidize the 4th house in a row to be rebuilt with TAX dollars……(thinking specifically also of the flood plains around American Rivers…..)
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@joe – mumblng stupid sh!t about climate change and global warming
The antifa terrorists pushing global warming rambles on and on… losers like you are a far bigger threat to America than your thoroughly discredited global warming nonsense.
Try learning to read, and try reading the hurricane history in Texas. This wasn’t even a big one.
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Repatriation is good for Texas. Mexicans go home to Mexico. Africans go home to New Orleans. Cajuns row the pirot down the bayou.
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Energy wont do much. We are between driving and heating season so we got lucky on timing. The storm did most of its damage inland so gulf production wasn’t hurt, and nowadays Nat Gas is so heavily produced inland that, as I said elsewhere last week, hurricanes are no longer fun for that product. Crude is now trapped on boats so that should glut a bit.
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hard to believe a cat4 hurricane hitting 4th largest us metro will cause only half the damage as sandy which was a trop storm when it came ashore
FEMA gave tough love to the uninsured in the NE, I bet they won’t do it to uninsured in hurricane belt
two houston dams were found to be in real bad shape in 2009 study “catastrophic failure”, minor repairs have been made but we’re too busy blowing up moonscape in arabia and asia to waste resources securing out own nation
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be interesting to see what happens to us mandated flood ins maps and premiums when huge portions of houston metro and tx gulf coast get added to flood zones, in NJ during sandy they took pics from the air and used that for flood zone mapping, hard to tell how geographically widespread the flooding is from tv coverage
the us has been ending the flood ins subsidies, be interesting to see if this tough love continues
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Floods are common on the Gulf Coast from Houston to New Orleans. Natives are prepared for floods. The dead are laid to rest above ground and covered with a pile of stones. If buried they would float to the surface. Finding them and reburying is troublesome. Every native has a boat, a hunting gun, fishing tackle, and a water supply.
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Flooding triggered by Tropical Storm Harvey inundating Houston in early estimates is expected to tally between 25 and 50 billion dollars, it could go much higher. In all reality, the Federal government will always prove to be relatively ineffective and not much help in this crisis that covers a large area and affects tens of millions of Americans.
In the case of a real disaster the government is generally not very effective, the real help will come from your neighbors, this has been the case throughout history. The article below delves into the fact if you are waiting for government help you may be dead before it arrives.
http://brucewilds.blogspot.com/2017/08/houston-you-have-problem.html
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houston needs to declare war on impervious surfaces, start ripping out paved driveways and residential streets and replace with gravel, start prepping now for next 800 year storm
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Impervious cover is not the problem with a 60-inch rainfall. The ground becomes soaked (hence, impervious) after the first few inches of rain. The other 55+ inches are runoff whether the ground is sponge or glass.
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Houston has one of the most severe land subsidence (Sinking – due to water, gas and oil extraction) in the US. It is located in the humid southeast of Texas with many water ways. They keep building and as j.c. said commented increasing the impervious areas in the area. The impervious surfaces increase the speed of the rising water in all streams during storms. I have read several articles that state the Houston area drainage system is insufficient and in need of major upgrades and or repairs.
I think I have seen this movie before. This was/is a monstrous storm without doubt and there will terrible human suffering before it is over but a significant contributing factor will be human error which compounded the natural disaster.
Really a sad situation.
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It was not the hurricane that caused so much damage but the locale just as in New Orleans.
1. A major metropolitan center was hit.
2. Texas is prone to flooding because of the hard compacted soil which cannot absorb moisture as well as other soils.
3. Hard rains can cause flash floods right in the middle of the city.
4. Too much of the city sits at or slightly above sea level. This is the same for many coastal cities.
stop the hype and start the cleanup.
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Yea but being slightly above sea level is far better than being slightly below. If NO was slightly above sea level, the damage would have been far lower with Katrina.
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Human Beings will ALWAYS build on the beach. THAT”S why we are there and not out in Omaha somewhere on vacation……………..
Just returned from a week’s condo rental in Maui. Was it great??!! NO ! I had to walk 150 yards to the beach! I wanted to be ON THE BEACH. THAT’s why I went there……
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Feel free to build on the beach at your own risk. Don’t be an @ss an expect everyone else to subsidize your lifestyle and buy you new stuff every few years.
Lots of people built beach houses before Al Gore invented global warming. Beach houses were glorified fishing shacks, many with no electricity. Pipes were drained and they were closed up every winter (no heat, no A/C). Nothing of value was ever kept in them.
Many people assumed their beach houses would suffer serious damage every few years, so nothing of value was ever kept there. They were “second homes” often bought by extended families or shared between distant cousins and such — the risk, even though minimal, was spread across many families.
If you are putting your family and your nostalgic items and items of value into a beach house — you have no right to expect more responsible people to bail you out from your own foolishness.
Build your next house well above sea level or we’ll be mocking you again during the next storm (yup, NEXT storm, they happen every few years so you should expect them)
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Med Man : ABSOLUTELY POSITIVELY agree with you. On another post, I stated that only ONE building on the plot of land can ever buy TAX-DOLLAR SUBSIDIZED insurance. One. Period. Done.
Next rebuild will be with YOUR own $$ or by the Ins. Co. to whom you paid LOTS of $$.. But not with MY money for your rebuild…..
STOP this madness. The cowboy living in the plains of Kansas should NOT be paying for YOUR 3rd or 4th beachhouse to be rebuilt….
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Think you (BillyBob Texas) and I are on the same page…
I sometimes use the “royal” you (really meaning to say “one”)… I should write “ONE should not build their house in a flood zone” instead of “you should not…” Its more precise, but it feels strange writing “one” all over the place
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” WE should not build our houses in a flood zone.” Who are the Bankers of the flood zone ? Wells Fargo Bank ?
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Please pay me, I said now. It’s all your fault I did not buy flood insurance.
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O/T a small real data attributed to India monetary legislation that I came across:
“India led all markets with a 20.3% rise in domestic traffic in June. However, the very strong upward trend in traffic has slowed since the country’s unexpected ‘demonetization’ in November 2016. India’s streak of year-on-year double-digit traffic growth may have ended with June.”
http://www.iata.org/pressroom/pr/Pages/2017-08-03-01.aspx
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If there is a big city in a flood plane like Houston, then build the infrastructure to guard against flooding! No free lunch!
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I find it offensive that Mish is claiming 5/6 of these beach dwellers were “uninsured” — like that is supposed to garner sympathy.
6 out of 6 built their houses in a flood zone. 6 out of 6 put their families and precious belongings in a flood zone.
These are not victims, these are people who failed sand castle building 101
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I am not attempting to garner sympathy for anyone.
Geese Louise.
I have no sympathy at all for anyone building in a flood zone with or without insurance.
Your comment proves you do not even know me.
Sheesh!!!
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Having “survived” living through storm Sandy (my home at the time was well above sea level, but we lost electricity, heat and water for over a month) — I hope people think twice about donating to Harvey “victims”.
Many of the victims are scamming you. They built a beach house at high tide and now they demand reimbursement for the Rembrandt and Picasso they supposedly stored there.
But the bigger issue are the charities and FEMA. The money doesn’t go toward helping people effected — not even the ones who’s homes were built in responsible locations (well above known flood areas).
After Sandy, the vultures — I mean repair contractors — came in. Let’s say your house had $15K worth of actual damage (I am making that number up for illustration).
If you use a contractor who is just trying to get work, FEMA will award you about $10K — after a deductible that is so complicated you will never figure it out. One will get this number if you paid for FEMA coverage or not, which makes many people feel stupid for buying insurance.
If you use a contractor who bribed FEMA… I mean gave kickbacks… no wait, I mean “accidentally left an envelope full of cash where FEMA would find it”… yeah, lets go with that excuse.
If you use a contractor that left an envelope full of cash for FEMA, then you will get appraised for about $30K of insurable damage, less a $5K deductible you won’t understand. The contractor gets paid $25K (for $15K of actual damage), and you get a brand new kitchen. Once again, it makes no difference if you bought flood coverage before hand.
The people who neglected their trees and caused a lot of areas to lose power for weeks? Same scam. “Arborists” who are on FEMA’s approved list get reimbursed much higher numbers, and it didn’t make any difference if the tree was diseased and insect ridden — it was the storm’s fault.
The charity and insurance scams that followed storm Sandy did financial damage than the storm itself.
Another warning to Texas: a lot of the repair work done after Sandy had to be redone less than a year later. Contractors (licensed) cut corners every which way, hoping to get as much “free” FEMA money as they could
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PS — if you are in the effected areas of Texas, hope you have a propane grill (I am guessing most of you do). A duel fuel generator is also an amazing thing (runs on gasoline or propane) — because gas stations can’t pump without electricity, and ATMs don’t run without electricity or without restocking.
One neighbor who deposited his family at my house (his house lost a bay window and was unlivable) owned a propane store. I had a grill, plus we scavenged others. Those grills fed I don’t know how many families in the neighborhood.
Several of us owned chain saws, and we cut paths through our streets. It was almost two weeks before the local police sent a car to check on us.
It was over three weeks before FEMA supposedly started accepting applications for whatever it is that they claim to do.
The Red Cross didn’t help my street / neighborhood (they couldn’t get past downed trees), but I heard later they helped other places.
Good luck Texas. Count on your neighbors, don’t wait for FEMA
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What was your experience / stories about looting?
Down here in The Republic, THAT won’t fly……already a few unsubstantiated stories. And our Governor will NOT be confiscating any guns from the residents, unlike those idiots in Louisiana. THAT won’t fly down here, either……
Looter’s gotta’ be stoopid to be working down here……
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