My heart goes out to the people of Texas, who have suffered such a great loss under Hurricane Harvey. I can’t image what it would be like to have your world submerged under water. Even if you have good insurance providing for a new home and car, lost personal mementos can never be replaced.
Estimates of Harvey’s damage run from $40 billion to $50 billion. The first part of the total, less than $10 billion, comes from lost business before, during, and after the storm. The rest comes from property damage. Harvey will go down as one of the costliest disasters in history—though it’s not nearly as bad as Katrina, which caused $130 billion in damages.
But Harvey’s harm reaches beyond local businesses and property. Texas accounts for about half our country’s petroleum and gas exports. It produces 30 percent of our refining capacity, which has been greatly diminished by the storm. We have all seen the effect of that in the sudden increase in gas prices at the pump. It will take weeks for refineries to make the necessary repairs to get gas production back to normal.
In the meantime, higher-priced gas is gouging the economy. It is estimated that for every 10 cents gas goes up, an extra $10 billion goes into the gas tank instead of being spent on other consumer goods. Consumer spending is a huge economic driver.
Still, despite all of Harvey’s economic destruction, some analysts believe that money spent to rebuild homes and buildings and replace cars and personal property could actually give a boost to the economy down the road. Only time will tell for sure.
For more information, please see this New York Times article about Hurricane Harvey’s economic effects.