Harvey Is Having Global Effects

Harvey has saturated American media for nearly a week, now, and its devastating effects along the route it has meandered across the Gulf Coast are going to be front page headlines for weeks if not months, as communities in its path struggle with one of the country’s worst natural disasters on record.

But this isn’t just a story of American tragedy—Harvey tore through a part of the U.S. that’s exceptionally dense with vital energy infrastructure. One-third of U.S. refineries lie along the Gulf Coast, and nearly all were affected by this storm. A major pipeline artery that transports those refined petroleum products from the Gulf to the East Coast was shut down last night. The average national gas price is up more than 13 cents per gallon from a week ago, and wholesale prices have spiked 15 percent as a result of the storm. American drivers can expect prices to continue to rise as supply chains are disrupted by Harvey’s after-effects.

This isn’t only an American story, either. Thanks to the shale boom, the United States is now a major oil and gas supplier on the global stage, so it stands to reason that disruptions in our supply chains are going to affect markets abroad. The FT nicely sums up this bizarre dichotomy:

The US’s new status as an energy powerhouse has created a more flexible, diverse, and arguably resilient world fuel market…But Harvey is exposing an Achilles heel: the concentration of US energy assets in a low-lying, hurricane-prone coastal corridor makes the world more exposed to local weather.

Industry consensus at this point seems to be that the U.S. energy industry will recover relatively quickly, and thanks to the shale boom there are plenty of barrels of crude and gallons of refined petroleum products held in reserve that will help suppliers meet demand in the coming days and weeks. But keep in mind that before the shale boom, this would have been a regional energy story. Now it’s a global one.

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