The Economic Effects of Harvey & Irma
The hurricane season has already wrought havoc and harm across the United States. Hurricane Harvey killed about 70 people in the Southwest last week, leaving tens of thousands homeless and spreading toxic chemicals throughout Texas. After devastating the Caribbean, the monstrous Hurricane Irma is expected to bring suffering to residents of southern Florida. Americans across the country are feeling the impact of these natural disasters economically as gas prices skyrocket, agricultural land is destroyed, and unemployment claims spike.
Gasoline prices are soaring toward a two-year high with the Labor Day driving rush approaching after Hurricane Harvey desolated the Texas Gulf Coast. With about 15 oil refineries closed as of Wednesday due to extreme flooding, gasoline prices are continuing to rise with the national average now at $2.43 per gallon (Bomey). In the short-term, panicked Texans are keeping their tanks topped off, this sudden demand further decreasing the gasoline supply. There were multiple reports about long lines in front of 7-Elevens throughout Texas, as drivers waited two to four hours for every pump. One positive externality created from this natural disaster is a website called GasBuddy. The website recently activated an online gas availability tracker throughout Texas, encouraging drivers to report gas stations that are out. In the screenshot of GasBuddy, red indicates all of the gas stations that drivers reported as being out of gasoline. Green indicates gas stations that have gasoline in stock.
Meanwhile, Hurricane Irma threatens to destroy Florida farmlands which may affect U.S. food prices and farmer finances in the months and years ahead. Trailing only California in produce growth, Florida has a significant impact on American grocery stores. The state accounts for about 10% of America’s fresh fruits and vegetables (Bjerga). However, the scarcity created by the storm has pushed prices for oranges and other citrus products higher this week. If the storm continues toward central Florida as forecasted, it could easily rip oranges and grapefruits from their branches, demolishing years of hard work and dedication by thousands of farmers. From an agricultural standpoint, Hurricane Irma marks a huge negative externality, limiting resources across the U.S. in the long-term.
Both Hurricane Harvey and Irma have the power to slow economic growth by one percentage point as measured by GDP. In fact, initial unemployment claims climbed to 298,000 last week after Hurricane Harvey hit the Southwest—the highest reading since April 2015 (Soergel). With a decrease in production and an increase in unemployment, it will be difficult for those affected by the storms to find a place to work. However, outside of the storms, the U.S. labor market remains in solid shape allowing businesses the opportunity to hire more workers. Additionally, the federal program of DUA (Disaster Unemployment Assistance) will help to provide temporary financial assistance to individuals affected by either natural disaster. Altogether, DUA benefits are available to workers in 39 Texas counties, making these natural disasters slightly easier to recover from financially. As seen in the picture, Texas residents who lost their home due to Hurricane Harvey are offered a temporary shelter until they can get back up on their feet.
Up to this point, in the weeks following both Hurricane Harvey and Irma, economists continue to predict an increase in national gas prices, a decrease in production and shipment of agricultural goods, and an even higher unemployment rate as tens of thousands are left without work. As the saying “guns or butter” goes, the U.S. government must choose to invest in rebuilding the agricultural economy thus removing the havoc caused by the two storms.
Bjerga, Alan. "Hurricane Irma Threatens $1.2 Billion of Florida Crops." Bloomberg.com. Bloomberg, 06 Sept. 2017. Web.
Bomey, Nathan. "Hurricane Harvey Pushes Gas Prices near Two-year High." USA Today. Gannett Satellite Information Network, 30 Aug. 2017. Web.
"Disaster Unemployment Assistance: How Workers Can Access the Program After Hurricane Harvey." NELP. National Employment Law Project, 7 Sept. 2017. Web.
Koenig, David. "Tourism, Agriculture Businesses Brace for Irma's Impact." ABC News. ABC News Network, 8 Sept. 2017. Web.
Mosier, Jeff. "How Panicked Drivers Are Making North Texas Gas Shortages Worse." Dallas News. N.p., 01 Sept. 2017. Web.
Shepherd, Todd. "Analysts: Hurricane Harvey Could Slow Economic Growth by Full Percentage Point." Washington Examiner. Washington Examiner, 10 Sept. 2017. Web.Soergel, Andrew. "Storms Cloud Economic Growth." U.S. News & World Report. U.S. News & World Report, 08 Sept. 2017. Web.