Moneymanagement’s Weblog

Ike hits Texas’ Economy

Posted in economics, interesting by moneymanagement on September 13, 2008

 

North Texas may see a spike in the price of gasoline and supply shortages next week, depending on how hard Hurricane Ike hits Texas Gulf Coast refineries.

Ike has also halted imports and exports at the Port of Houston, air travel to Gulf Coast cities and rail service out of the region. – all critical to the Texas economy.

At an evening news conference, state officials estimated that the economic impact would reach $81 billion – and could creep up to $100 billion over the next 24 hours.

As the storm approached this week, at least nine Houston-area refineries evacuated workers and shut down. The nine, including refineries owned by Irving-based Exxon Mobil, BP and Shell, are responsible for refining 2.3 million barrels of oil per day.Flooding is a major concern with Ike as most of the refineries are on the water. Ike is expected to have a very large storm surge because of its size.

Even if flooding is not severe, it will take time to move employees back into the area.

Most important, experts said, the extent of damage to the power grid could determine how long refineries stay out of commission.

 

Shutdowns 

Meanwhile, other aspects of Texas infrastructure are facing shutdowns and slowdowns. The Port of Houston plans to shut down its cargo operations during the weekend, and air and rail travel out of the area are on hold.

Wal-Mart Stores Inc., the largest U.S. retailer, and Home Depot Inc., the second-largest, have major import facilities in Baytown.

Wal-Mart’s emergency management team senior operations manager, Bryan Koon, said Ike has been on the company’s radar for at least two weeks. Wal-Mart has diverted shipments to Los Angeles and Savannah, Ga., and some boats are holding at sea until the storm passes. This week, containers in port were moved to safer ground, he said.

 

 

 

Air travel 

Dallas-based Southwest Airlines Co., American Airlines and other airlines canceled flights to Houston and Corpus Christi.

Fort Worth-based Burlington Northern Santa Fe Railroad closed its Houston and Galveston operations Thursday, and it removed equipment from the areas expected to be hit by Ike.

Union Pacific Railroad removed 4,000 rail cars and 200 locomotives from areas expected to be affected by the hurricane.

 

Some Comments from http://www.huffingtonpost.com

Many citizens evacuated, some freely, some forced to leave the area. It cost $600 to $1,000 dollars to evacuate, lodged a couple days and return home. It is hard for some to imagine many of these people will be returning home not only to destruction, insurance issues and higher premiums but loss jobs and incomes as well. That adds to unemployment, benefit needs and financial problems like foreclosures and credit issues. They and my fellow residents are in my prayers. We have all struggled with destructive storms for the past couple months.

  Another one says
I’ve been working in the Houston refinery and chemical complex for most of my working life, and my dad did the same before me. If we get a 15+ foot storm surge up the Houston Ship Channel, it’s going to flood refineries, and that’s going to be an economic disaster. Those refineries are miles and miles of pipes, thousands of valves, tens of thousands of instruments and control system devices, and if that stuff goes under water, those places are out of business for months. Knock 25% of America’s refining capacity down for a month or so, and you’re going to be paying $7.00 a gallon for gas – if you can find it at all.
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