Business Column

How Hurricanes Harvey and Irma are hurting Syracuse

Sara Swann | News Editor

Since Houston is the U.S.'s center of oil refining industry, Harvey will cause gas prices to spike up north.

Hurricane Harvey’s record-breaking rainfall and deadly winds have ravaged Texas.

Harvey may turn out to be the most costly storm in history, topping Hurricane Katrina’s record $100 billion, according to AccuWeather, and Hurricane Irma could cost nearly as much. But those costs won’t be confined to Texas and Florida. Here are three ways we’ll see the economic impact of these storms in the coming weeks.

Gas prices

Gas prices have increased across the United States since the storms began. Texas is the country’s center for the oil and gas industry, and major flooding has either shut down or severely damaged many refineries in Houston. At least 31 percent of the country’s total refining capacity has been affected by Harvey, according to CNBC.

Harvey’s effects are also being felt close to home. In Syracuse, gas prices have increased by more than 40 cents in the past two weeks, according to GasBuddy.

The Colonial Pipeline, which transports refined oil products from the Gulf Coast to the East Coast, has experienced disruptions and shutdowns due to damage to the pipeline and several of its suppliers being shut down from the storm. As the weather subsides, certain sections of the pipeline have are scheduled to reopen.

The long-term impact on the oil market is still unclear, but there is speculation that the disruptions in the oil pipelines could cause prices to keep growing over the next several weeks.

Small business and the local economy

With so much of Houston’s population unable to work and businesses just beginning to reopen, the city has lost out on economic activity. An early estimate from an analyst at Moody’s Analytics suggests the loss of economic output could total $10 billion.

Small businesses are hurting the most from these natural disasters because they don’t have the resources and cash flows often held by corporations to fall back on. Small business owners rely mainly on local populations as their customer base, which is ultimately the lifeblood of their business, according to Forbes.

Many businesses were devastated after Katrina because a sizable portion of New Orleans’ population did not return, according to the Wall Street Journal. This caused a significant drop in employment, and the city’s population has not recovered to pre-Katrina levels. Houston could see a similar drop in population following Harvey, but with a population of about 2.3 million, it’s unlikely that a significant portion will relocate.

Recovery

Houston is in a strong position to recover from Harvey. The city’s economy was in good shape before the hurricane, and the rebound in oil prices has fueled a slow and steady economic recovery. The housing and labor markets in Houston have been improving as well, according to Bloomberg.

Houston’s diversified economy will also play a part in cushioning the downturn. The city’s economy was long built on oil, but in recent years its chemical, education and healthcare industries have grown to be major employers in the region, according to the Wall Street Journal.

It’s a relief to know Houston has a strong foundation to fall back on, but the city has a long way to go to fully recover from Harvey’s devastation. With the support of millions of generous citizens, companies and organizations, Houston can emerge from Harvey as a stronger and more united city.

Daniel Strauss is a junior finance major and public communications minor. His column appears biweekly. He can be reached at dstrauss@syr.edu and followed on Twitter @_thestrauss_.

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