In the space of a week, Hurricane Harvey has flooded miles of real estate, displaced thousands of Texans, and shut down more than ten percent of the United States’ ability to refine and extract oil and gas. Even if you’re not being bombarded with wind and rain, the impact of Hurricane Harvey will still be felt for some time to come. In fact, the price of a gallon of gas has climbed 18 cents since Hurricane Harvey struck in late August.
That price hike is bad enough for the average driver, but a climbing gas price is just the catalyst for several more troublesome economic repercussions. Here’s what the experts are forecasting.
Why Is the Price of Gas Climbing?
If you’ve been focusing on the human toll that Harvey has racked up, you might have missed the fact that about twenty percent of America’s refining capacity is located right in the path of Hurricane Harvey. Through voluntary closures and storm damage, almost half of that infrastructure is currently out of commission and as a result oil and gas shipments are stalled.
That delay is causing the supply of gas to fall while the demand stays constant. The result is the rising price of a commodity that’s required in nearly every sector of the American economy.
Consumer Behavior Becomes More Conservative All-Around
When the average gas purchase jumps four to five dollars every time a driver fills up, that extra cost can change someone’s entire buying perspective. In the past, similar gas spikes have initiated a period of conservative spending in the United States’ economy. Consumers are generally less generous with their money. The dine out less and buy fewer luxury items, which means sparse profits for businesses.
As you can imagine, an economy handicapped by overpriced necessities (like gas) tends to begin shrinking.
Billions Could Be Missing From the American Economy
“Conservative” isn’t a joyous word when it comes to describe consumer habits. According to Stephen Moore, a fellow at the Heritage Foundation (and a former Trump advisor), for every penny that the gas price rises, the American economy loses between $1 and $2 billion. We’re at eighteen cents and counting.