Hurricane Katrina affected gas prices for a decade.
It looks like Harvey is set to do better; the refineries around Houston are shutting down, and pre-storm predictions had it taking a year and a half to two years to recover from "two feet" of flooding. Given the presumed height of stop signs, they're getting twice that. There's about as much rain as they've had still to come, per the NOAA forecasts.
How fast can Houston get a working logistical network, sufficient to allow it to feed and house its population, again? Harvey's expected to be there until Wednesday, raining all the while. Right now, the ship channel, the roads, the railroad, and the airport are all unusable. Certainly there is a monumental order of operations problem waiting once the flood waters go down, and that... when does that happen? Within three days of the rain stopping? So not quite a week for the surveying to start to find where the roads are washed out, where the ground under the railbed is too saturated to take the load of a train, where the ship channel has silted up and needs dredging, where there is uncontaminated diesel -- if Houston puts the storage tanks in the ground, everything in them is contaminated -- and where there are working support vehicles for the airport. And given a significant drainage basin feeding into the region, three days is likely severely optimistic. (Plus everybody else who hasn't been rained on yet. Many of the models have Harvey wandering back out to sea, re-intensifying, and coming ashore again.)
It looks like it will require a major effort by the USG to put a working city back where Houston now is. This is inconsistent with the threatened default over the debt ceiling, which a significant faction of Congress wants and which Trump seems fine with if he doesn't get his border wall. Not knowing how quickly Houston will be restored to economic function makes the time those refineries come back online even more indeterminate. (Since nobody was planning for this much flood, the existing flood plans aren't sufficient, so there's going to be large uncertainty there, too.)
So... global recession? Seems likely just from the storm damage; aviation fuel can increase in price, but interrupted plastic feedstock deliveries just don't happen, and that has cascade effects. Run the price of gas up in the US and that has cascade effects, too. A month of "how bad is it?" and "is the US going to default?" in combination makes it seem certain.
27 August 2017
Houston, we have a problem
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4 comments:
Is Houston by itself really important enough to the global economy to cause a recession?
Shipping will re-route to other ports until service is restored. If less raw petroleum is available, plastic factories will turn to more recycled feedstocks. (I work in plastic recycling. Raw petroleum is our competition, and the price of petroleum does directly affect both how much recyclable scrap is bought and how high a price is worth paying.) The price of fuel going up will push everything else up too, but I would expect it to be more of an American issue than a worldwide issue.
+kathmandu Third largest city in the US is going away for the foreseeable in economic output terms. Roughly a third of the US' refining capacity -- a low-level base input to many things. The policy response to this is guaranteed to be non-optimal.
Since the global economy was not doing entirely splendidly before this happened, yeah, I think it is.
Shipping can't re-route to other ports; the other ports don't have refineries. (more literally, the refinery capacity.) The spare rail capacity isn't there to get the containers into the other ports, and so on. More recycling would be great but the people whose supply chain expects certain deliveries aren't going to get them anything like on time, and the whole long-supply chain, minimal inventory setup the material economy runs on is great for high returns on capital and absolutely wretched for "robust".
Plus the immediate problem isn't the economic kick from losing Houston's net-positive contribution to the US economy; it's the supply chain into Houston. Food, water, and power are all going to be problems, and there are a lot of people in Houston. Not seeing much about that, which is worrying.
"It looks like it will require a major effort by the USG to put a working city back where Houston now is."
Assuming the USG even cares. The junta has already shown a pretty serious lack of interest in reconstructing any city, even if it's in a territory controlled by junta members.
+orc I did note with some surprise that the governor of Texas had made specific efforts to avoid dipping to the state's rainy day fund.
I've seen a very little bit about getting cholera vaccines in; it doesn't seem to be happening. Which is not likely to have good outcomes.
It seems strange; I wouldn't think their disconnect from reality is large enough to not recognize that the money comes from cities, but it seems as though it must be.
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