A number of organizations have released estimates of the costs of Harvey’s destruction, The Washington Post reports. If the figures are accurate, Harvey will rank among the costliest storms ever to have hit the U.S.
A report released Wednesday by risk modeling agency RMS puts the total cost of Harvey’s devastation between $70 billion and $90 billion. The organization notes that these figures are not official estimates and that the costs will continue to rise as flooding persists.
“…with the rain still falling heavily and the waters rising, the situation is too fast-moving to be stating with certainty what the losses in Texas could be,” said Michael Young of RMS.
Flooding accounts for the lion’s share of Harvey’s damage. RMS estimates that just 10 percent of Harvey-induced economic losses are attributable to wind and storm surge damage. The remaining 90 percent is due to flooding.
Other reports support RMS’s findings. CoreLogic, another firm that gathers data on natural disasters, estimates that between $1 billion and $2 billion worth of Harvey’s damage to residential and commercial properties results from wind and storm surge damage. A third firm, S&P Global, estimated wind- and storm surge- related losses at $6 billion.
Most of the rest of the costs are, again, the result of flooding.
A standard home insurance policy, the Post notes, does not cover flood damages. Most people who elect to purchase flood coverage do so through the federal government’s National Flood Insurance Program (NFIP). But, per the Post, Federal Emergency Management Agency (FEMA) data indicates that just 17 percent of those who own property in the areas where Harvey struck hardest carry flood insurance through NFIP.
Reuters says CoreLogic’s report indicated that 70 percent of the flood damage Harvey wreaked and continues to wreak will be uninsured.
“The majority of [the financial] losses [Harvey causes] will be uninsured,” Young, of RMS, said.
Still, NFIP reports that 500,000 people who own property in Harvey’s path do carry flood insurance policies, and expects the storm to cost as much as or more than any similar disaster to date. CoreLogic estimates that between $6.5 billion and $9.5 billion worth of the flood damage Harvey wreaked on residential properties is insured.
Harvey has caused 51 inches worth of “observed cumulative” rainfall, according to RMS. No other U.S. storm has induced so much rain. Tropical Storm Allison, which hit the Gulf Coast in 2001, produced upwards of 30 inches of rain, according to AccuWeather. Hurricane Katrina produced between five and ten inches.
Like Harvey, though, Katrina caused catastrophic flooding. But, the latter storm wreaked most of its damage by virtue of a 28-foot storm surge, which smashed levees.
Katrina left $108 billion worth of damage in its wake after it ravaged Louisiana in 2009, according to a report by theBalance.com. Half of the costs were attributable to flooding in and around New Orleans.
In addition to wreaking financial devastation on property owners in its path, Harvey will likely take a toll on the larger U.S. economy. The storm has forced a shutdown of almost a third of the country’s oil and gas refinery capacity, according to CBS News, and has crippled pipelines that carry oil from the Gulf to the rest of the nation.
The Colonial Pipeline, which runs from Houston to the Northeast and provides 40 percent of the gasoline across the American South, is currently non-operational.
Gas prices are soaring in Houston and around the country. Since Harvey made landfall Friday. the average per-gallon price of gas jumped more than $0.20 in Texas and just under $0.17 across the nation, per AAA.
Former Shell Oil president John Hofmeister said oil production in the Gulf Coast is crucial to the industry.
“Without it we’d be in gas lines all the time. We need that Gulf Coast,” Hofmeister said.
He added that the refineries will not be operational until mid-September at the earliest, Thanksgiving at the latest.
Hurricanes Katrina and Rita demonstrated how damage to oil and gas production can hurt the US economy. They damaged 19 percent of U.S. oil production, shutting down 113 “offshore oil and gas platforms” and damaging 457 pipelines.
In the quarter following Katrina, U.S. economic growth fell 65 percent. But, in the subsequent quarter, the growth rate increased 270 percent and came in 26 percent higher than it had been in the quarter prior to the storms.
Granted, the deceleration of economic growth after was due only in part to oil industry slowdowns.
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