Market Research News

Economic Impact of Hurricane Harvey: Crude Prices Drop While Gas Prices Rise

  • August 29, 2017
  • By Pete Nisbet
  • 0

The economic impact of Hurricane Harvey will affect the entire USA. Hurricane Harvey is sure to have a massive economic impact on Texas and on Houston in particular. However, the financial implications will also extend into the USA as a whole.

 

Damage is practically certain to be above the $150 billion of Hurricane Katrina. Large numbers of premises will undoubtedly be uninsured. Some analysts are estimating that as many as one-third of losses will be uninsured. It looks like the only business that will benefit will be those relating to home repair and redecoration.

Impact of Hurricane Harvey

Crude Oil Prices Fall

Crude oil prices fell due to an expected drop in demand because of refinery closures. However, it is believed that such closures will be temporary. Refineries have been built to withstand this type of hurricane, and lengthy closures are unlikely. Gasoline futures rose, again due to the temporary closure of many refineries in the Houston area.

US Car Industry Hit

The automobile industry has also been badly hit in Eastern Texas. Large numbers of dealerships have closed, many possibilities for the last time. The demand for vehicles in the area has unsurprising been more or less put on hold.

 

Hurricane Harvey will not only affect Texas but the entire US car industry. Sales of new cars will plummet due to the severe effect of flooding on dealerships, and estimates of new vehicle sales in the US for August have already been reduced.

Hurricane Harvey: Climate Change?

Things are not yet improving; in fact, they are about to get worse. Hurricane Harvey has more damage to create before it blows out and flooding is not estimated to have yet reached its peak. There is lot more rain forecast for the coming week. The hurricane is just one of several severe and unusual weather conditions worldwide, many experts attributing it to climate change.

Economic Impact of Hurricane Harvey and Insurance Premiums

Many experts believe that climate change did not cause Hurricane Harvey, but that it certainly increased its ferocity. Many have predicted that things will only get worse, not better. We can expect more powerful hurricanes and tornadoes worldwide in the future. Insurance companies in the US are considering increasing flood risk premiums because of this.

 

Although crude oil prices are dropping due to temporary refinery closures, gasoline prices are rising. This is due to refinery closures, even if only temporary, resulting in lower gasoline production. When availability drops, prices rise – possibly by as much as $1 a gallon. Hence the rise in gasoline futures.

 

About Pete Nisbet

Pete has been working in the field of website design and content for many years. He has a great interest in technology and current affairs, particularly business affairs. Pete's interests are technology, writing and world affairs and he is widely traveled. Pete also holds an Honors BSc from the University of Edinburgh.