Houston, Texas. August 30th. Tropical Storm Harvey, downgraded from a category 4 hurricane, made its projected second landfall on the U.S. Gulf Coast on Wednesday morning, with extreme rain flooding southeastern Texas and southwestern Louisiana. Harvey hit the coast just west of Cameron in Louisiana and east of Port Arthur in Texas, with sustained winds at up to 45 miles an hour, according to the National Hurricane Center, NHC, in its advisory at 6a.m. Central Time. “Catastrophic and life-threatening flooding continues. Persons located within areas should take all necessary actions to protect life and property from rising water and the potential for other dangerous conditions,”
After dousing Houston with a record rainfall of more than 50 inches in some places over the weekend, the tropical storm is expected to produce more rain as it travels inland across the southern states. The National Hurricane Center, NHC, forecast up to 10 inches around the southern Texas-Louisiana border. The storm looked to reach into western Kentucky, creating fears of flash flooding and increased river levels. Massive rain was already flooding parts of Southeast Texas, including Beaumont and Port Arthur, early Wednesday.
The National Hurricane Center also said the threat of heavy rain in the Houston/Galveston area has ended, but that the dangerous flooding will continue for the rest of the week.
“The effect of this historic river and bayou flooding will remain ongoing long after the rains end. Water in area bays and coastal waters will remain elevated due to the excessive freshwater runoff over at least the next several days,” the National Weather Service said in a statement early Wednesday.
Harvey hit the Texas coast on Friday as a category-4 hurricane, with the area around Houston — the U.S.’s fourth largest city — hardest hit. Officials on Tuesday said more than 13,000 people had been rescued from their homes in the Houston area so far, and more than 17,000 had fled to shelters. At least 18 people are reported dead, according to media reports.
The oil industry has particularly felt the pain, with roughly one-third of the U.S. refining capacity located along the Gulf Coast. At least 3.6 million barrels of day have come offline in Texas and Louisiana because of the heavy rain and wind, counting for about 27% of total U.S. refining capacity.
The October gasoline contract RBV7, +3.43% has soared 5.8% so far this week to trade around $1.63 a gallon on Wednesday. Crude oil CLV7, -1.01% , however, has slumped in wake of Harvey due to fears the refineries will demand less U.S. oil and add to the global supply glut. West Texas Intermediate crude was down 0.5% at $46.23 a barrel on Wednesday, sending it 3.5% lower for the week so far.
The largest oil refinery in the country is shutting down as Hurricane Harvey causes more catastrophic flooding. Early Wednesday, Saudi Arabia State owned Aramco’s Motiva said it started closing its Port Arthur refinery “in response to increasing local flood conditions.” The plant won’t open until flood waters recede.
Motiva had been steadily reducing production at the plant for days. Late Tuesday it was running at only 40% capacity. Motiva’s decision follows a move by ExxonMobil (XOM) to shut down its oil refinery in Baytown, Texas (Houston Metro) on Sunday. The company said it discovered roof damage at the plant, which is the second-largest in the country.
In all, at least 12 refineries are currently offline, and flooding has knocked out a significant portion of the nation’s refining capacity.
Hurricane Harvey will be the most expensive natural disaster in U.S. history, AccuWeather said Wednesday, estimating the full cost at close to $160 billion. That would be similar to the combined cost of Hurricanes Katrina and Sandy, the weather service said in a report. The cost will shave 8/10 of 1% off GDP, said the report.
“Business leaders and the Federal Reserve, major banks, insurance companies, etc. should begin to factor in the negative impact this catastrophe will have on business, corporate earnings and employment,” said Dr. Joel Myers, founder and chairman of AccuWeather.
Gasoline futures soared Monday as Tropical Storm Harvey continued to wreak havoc on Texas, knocking major Gulf Coast refineries out of action.
And while the storm is also expected to curtail offshore crude oil production in the Gulf of Mexico, crude futures are under pressure. That’s because the supply impact is more than offset by the hit to demand for crude by the refinery shutdowns.
West Texas oil futures fell as the market expects that refineries will demand less oil as they take weeks, maybe longer, to come back on line. Brent crude on the other hand stayed stronger as the U.S. is expected to demand more from Europe as well as shut down of some Libyan oil production over the weekend.
Photo: Houston neighborhood submerged under water by Hurricane Harvey
The Bureau of Safety and Environmental Enforcement late Sunday estimated 331,370 barrels a day worth of crude-oil production had been halted, equal to around 18.9% of current Gulf output. There are reports of U.S. traders already turning to refiners in North Asia in search of product cargoes.
At the pump, retail gasoline prices edged higher, with the U.S. national average at $2.364 a gallon, a rise of 0.2 cent from Sunday and 3.3 cents from a week ago, according to fuel data site GasBuddy. Gasoline prices had risen late last week as the danger from the storm became more apparent.
Meanwhile, the closure of the Houston Ship Channel and loading terminal in the Houston area is likely to hamper imports and exports of crude oil and oil products for weeks, which could substantially distort U.S. inventory data.