Hurricane Harvey dumped enough rain on Texas to fill the entire Chesapeake Bay. Widespread flooding caused an estimated $190 billion in damage, meaning Harvey could be the most expensive storm in American history.
The hurricane hit the energy sector particularly hard.
Over a dozen oil refineries along the Gulf Coast shut down or stalled production, reducing the country’s refining capacity by 20 percent. That caused gasoline prices to rise nationwide. In parts of Texas, gas prices rose 50 cents at the pump.
But consumers needn’t worry about short-term price hikes. History indicates the market will stabilize and prices will quickly return to previous levels.
When Hurricane Katrina hit in 2005, gas prices rose from a national average $2.60 a gallon to as high as $5 in some places like Georgia. Yet, by the end of 2005, thanks to an increase in energy imports and domestic production, gas prices were lower than they were before Katrina struck.
Today, our energy supply is more robust and geographically diverse than in 2005. So the recovery will occur sooner.
Current U.S. oil reserves are 60 percent larger than they were in 2008 and these energy resources are in different parts of the country. While the amount of U.S. crude oil produced in the Gulf of Mexico has increased, the Gulf’s share of total U.S. crude oil production decreased from 27 percent in 2003 to 16 percent in 2014. Other regions of the country have become major oil producers. As a result, the U.S. energy supply is less vulnerable to an isolated natural disaster, no matter how vicious.
Energy companies have also improved their disaster preparedness. Before Harvey hit, firms began shuttering refineries and evacuating personnel. Many of the refinery closures were due to proactive safety measures, not facility damage.
By shutting down facilities safely and preventing long-term damage, firms put themselves in position to quickly ramp up production and refining capacity. As early as Sept. 4, eight refineries had started prepping to reopen. Just three days later, ConocoPhillips reported that its Eagle Ford Shale wells had been restored to over 90 percent of pre-storm production.
Thanks to these efforts, drivers are already noticing falling prices at the pump.
Aside from working to resume production and relieve drivers, energy firms are doing everything they can to alleviate Texans’ suffering and get hurricane victims back on their feet as soon as possible. ExxonMobil, for example, contributed $500,000 to relief efforts, Chevron donated $1 million, and ConocoPhillips dished out $5 million. Weatherford International set up a donation page for employees and families affected by the disaster, and pledged to match donations.
Energy firms’ efforts are just a small part of the overwhelming support Americans have shown Texas. Citizens, celebrities and corporations alike are lending a hand. A good Samaritan used his Escalade with monster-truck tires to tow a National Guard vehicle. J.J. Watt, the Houston Texans superstar, helped raise more than $37 million for Harvey relief. And Coca-Cola gave two men permission to break into their warehouse and steal bottled water for community residents in dire need.
Harvey was devastating for Texans, and it temporarily raised prices at the pump. But thanks to energy companies’ improved safety precautions, more diversified supplies and relief efforts, Texas and the nation are poised to bounce back stronger than before.
Andrew Langer is president of the Institute for Liberty.