Hurricane Harvey could be the costliest natural disaster in US history — here's how we'll know the true cost by Akin Oyedele on Aug 30, 2017, 2:59 PM Advertisement
 It will take several months to work out the full impact of Hurricane Harvey on the US economy. So far, the consensus is that it won't cause that big of a hit to the overall economy's growth, although its personal impact already is and will continue to be far greater. "We expect the effects of Harvey to be substantial and lasting," UBS economists said in a note. They added that it's difficult to forecast the full impact, even by comparing this to previous hurricanes, because each one is unique. Here's how economists are calculating its impact: The cost of Harvey  AccuWeather forecasts that Harvey would be the most expensive natural disaster in US history, at about $160 billion. Other estimates are more conservative, but rising. According to data from the risk modeler Enki Research cited by Bloomberg on Wednesday, the hurricane could cause $75 billion in economic losses. That's up from $42 billion Tuesday.
Gas prices  Drivers are already paying more at the pump amid shutdowns of oil refineries in Texas. Prices compiled by AAA showed that the average cost of a gallon of regular unleaded gas was $2.40 per gallon on Wednesday, up from $2.34 a week earlier. That's because shutdowns have slowed the flow of gas from the epicenter of Texas' oil refinery industry, which processes nearly one-third of America's crude oil. Earlier on Wednesday, the Motiva Port Arthur refinery, the largest in the US, began shutting down as flood waters rose. And because refiners are demanding less crude oil, prices are falling. West Texas Intermediate crude, the US benchmark, is down 4% this week. "You've got a little less Eagle Ford production, and a little bit less Gulf of Mexico production, but it's nowhere near the demand that's been taken offline from the refiners," said Rob Thummel, a portfolio manager at Tortoise Capital, which manages $15 billion in energy assets. Thummel said the sheer demand for gasoline would have the refineries back up and running as soon as they can. Goldman Sachs estimated that it could take "several months" for demand to return to pre-hurricane levels.
Exports  The US has become a bigger exporter of oil, and activity in Texas is strongly correlated with the national level. According to Deutsche Bank, Houston accounted for 21% of chemicals exports in the second quarter. "Harvey could potentially drag on H2 real GDP growth by as much as -20 basis points (bps)—mainly through disruptions to exports," said Brett Ryan, a senior US economist, in a note Monday.
See the rest of the story at Business Insider
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