Massive flooding caused by Harvey along Texas' refinery-rich coast could
have long-standing and far-reaching consequences for the state's oil and gas
industry and the larger U.S. economy. The storm's remnants left much of Houston
underwater on Sunday, and the National Weather Service says it's not over yet:
Some parts of Houston and its suburbs could end up with as much as 50 inches (1.3
meters) of rain.
With the heavy precipitation expected to last
for days, it's still unclear how bad the damage will be, but there is already
evidence of widespread losses. Key oil and gas facilities along the Texas Gulf
Coast have temporarily shut down, and flooding in the Houston and Beaumont
areas could seriously pinch gasoline supplies. Companies operating in the Gulf
of Mexico have evacuated drilling platforms and rigs, crimping the flow of oil
and gas.
Experts believe gasoline prices could increase
as much as 25 cents a gallon.
Harvey's toll on air travel in the U.S. is
set to extend into Monday, with the tracking service FlightAware.com reporting
that more than 1,400 flights already have been canceled. That's in addition to
more than 2,000 canceled over the weekend.
Economy watchers were looking to oil futures
markets Sunday night and stock trading in the U.S. Monday morning for further
indications of fallout.
Here's what was known as of Sunday night: The Total Investment & Insurance
Solutions
REFINERIES
Nearly a third of U.S. refining capacity sits
in low-lying areas along the coast from Corpus Christi, Texas, to Lake Charles,
Louisiana. Beyond the shutdown of refineries at risk of a direct strike from
high winds, there's the threat of flooding and potential power outages for
gasoline supplies.
Refinery outages continued to spread Sunday,
with about 2.2 million barrels per day of refining capacity down or being
brought down, according to analysts at S&P Global.
Valero Energy Corp., whose two big Corpus
Christi refineries escaped damage, said it was working with federal and Texas
agencies and its business partners to determine what infrastructure was needed
to resume refinery operations.
Even before Harvey hit, the prospect of
supply disruptions sent gasoline futures to $1.74 a gallon, their highest level
since April, before they retreated to around $1.67 by Friday afternoon. At the
pump, experts see gasoline increasing 10 cents to 25 cents a gallon.
Given the strictures faced by the refineries,
"This is the dominoes starting to fall," Patrick DeHaan, senior
petroleum analyst for Gas Buddy, said Sunday. "This is sort of slowly
turning out to be the worst-case scenario." The Total Investment & Insurance Solutions
OIL AND GAS
Companies have evacuated workers from oil
platforms in the Gulf of Mexico. The U.S. Bureau of Safety and Environmental
Enforcement said Sunday that workers had been removed from 105 of the 737
manned platforms used to pump oil and gas from beneath the Gulf.
The agency estimated that platforms
accounting for about 22 percent of oil production and 26 percent of natural gas
output in the Gulf had been shut down.
"After the storm has passed, facilities
will be inspected," the agency said in a news release. "Once all
standard checks have been completed, production from undamaged facilities will
be brought back on line immediately. Facilities sustaining damage may take
longer to bring back on line." The
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SHIPPING
The shipping industry also is expected to be
disrupted by the worst hurricane to hit the Texas coast in more than 50 years.
Shipping terminals along the Texas coast shut down as the storm approached.
Port operations in Corpus Christi and Galveston closed, and the port of Houston
said container terminals and general cargo facilities closed around midday
Friday.
Rates increased for carrying freight between
the Gulf and the U.S. East Coast. The
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TRAVEL
More than 1,400 flight cancellations are
reported for Monday, according to FlightAware.
Houston's two airports were closed to all
flights except those connected to relief efforts. Houston Bush Intercontinental
Airport was not expected to reopen Monday until noon at the earliest. Houston
International Airport was scheduled to remain closed until Wednesday morning.
Airlines were offering customers the chance
to reschedule trips that would take them to Houston, San Antonio or Austin from
Friday through the weekend. The Total
Investment & Insurance Solutions
UTILITIES
Researchers at Texas A&M University
estimated that the storm would knock out power for at least 1.25 million people
in Texas. They said the hardest-hit areas will include Corpus Christi, which is
on the coast, and San Antonio, which is about 140 miles (225 kilometers)
inland. The Total Investment &
Insurance Solutions
INSURANCE
A firm that does forecasts for insurance
companies expects wind-damage claims in the low billions of dollars, and
possibly reaching as high as $6 billion.
Risk Management Solutions Inc. said storm
surges and inland flooding could be an even bigger source of losses. If the
firm is correct, that would put homeowners and the government-backed National
Flood Insurance Program at risk.
The flood program is run by the Federal
Emergency Management Agency, which owes the Treasury about $23 billion in funds
borrowed to cover the cost of past disasters, according to a recent report by
the U.S. Government Accountability Office.
Homeowner policies offered by insurance
companies typically don't cover flood damage, yet a relatively small percentage
of homeowners have flood insurance through the federal program.
Property data firm CoreLogic estimated that
insured losses for home and commercial properties, as of Friday, would be $1
billion to $2 billion from wind and storm- surge damage.The Total Investment & Insurance Solutions
