Olivier and Mann – Most oil refineries have had to close and nearly twenty percent of the total oil and gas production in the area has been put on hold after the biggest hurricane to hit the Gulf of Mexico in over ten years made landfall.
Hurricane Harvey, classed as a terrifying category 4 hurricane, brought with it very strong winds and widespread flooding which has driven thousands of residents away from their homes and businesses.
The disruption to the oil supply is expected to have a knock-on effect and cause a short-term jump in prices at the pump.
The total cost of the hurricane is expected to exceed $40 billion and cause immediate losses of over $20 billion.
The route taken by the storm saw it travel across Texas and the Gulf of Mexico, hitting the epicentre of the US energy business. The area is home to nearly 50 percent of the US oil refinery production and twenty percent of actual oil production.
In Houston, home to the second biggest port in America by total trade, catastrophic flooding has swept through the streets and has caused several deaths so far, with the final toll yet to be determined.
Pump prices jumped ten percent prior to the storm hitting and a further twenty to thirty percent rise is expected in the locale, with less dramatic increases seen in other parts of the country.
Price of other commodities could also be affected because of the disruption to supply lines because of flooding and with the port being out of service.
The global economy is unlikely to be greatly affected as the US is not a key energy exporter and there are still huge stockpiles of oil.
It may be a fortnight or more before things start getting back to normal and prices recede.
Houston is the 4th biggest city in the US and generates more than half a trillion dollars to the US economy.