Harvey’s not done yet – more flooding and higher fuel prices as week moves on

Estimates for rainfall totals for Texas and Louisiana through Sept. 2. (Photo: Riskpulse)

Estimates for rainfall totals for Texas and Louisiana through Sept. 2. (Photo: Riskpulse)

Many roads in Houston area will likely remain closed as cresting rivers lead to additional flooding later this week

As now Tropical Storm Harvey continues to meander its way around Texas, it is dropping historical levels of rain and leaving areas of Southeast Texas looking more like rivers than roadways. And while recovery efforts – including search and rescue operations which are still ongoing in some areas – the nation as a whole is about to feel the impact of the storm through increased fuel prices.

In the two days leading up to the storm, reports Breakthrough Fuel, Gulf Coast spot prices for gasoline jumped 20 cents per gallon. Diesel, though, only saw a 1-2 cent per gallon increase. Brett Wetzel, senior manager-applied knowledge, at Breakthrough told FreightWaves ahead of the storm that diesel prices typically do not follow the same volatility pattern that gas prices due in a situation like this because of the more consistent purchasing habits of commercial fleets.

“Following the initial impact, early week trading has started to show national pricing impacts from Harvey,” Breakthrough Fuel noted in blog posting on Monday. “While crude oil prices have shown early declines, both gasoline and diesel spot prices have increased. At the time of publication, the front month of NYMEX heating oil (which is used for the benchmark for ULSD pricing) was up just over 1.6¢/gallon, with the Gulf Coast spot price moving an additional 3.3¢/gallon. These spot market price movements will translate to the wholesale diesel market in the coming days, as diesel moves through the supply chain. At the fueling station level, the wholesale pricing impact to diesel has not yet been significant.”

Yet to be determined, the posting noted, is the long-term impact of the storm on supply and pricing. The Gulf Coast supplies 15% of national refining capacity, producing just over 2 million barrels per day. Four refineries in the Corpus Christi area and four around Houston were shut down before the storm hit and offshore oil production has been reduced by roughly 20%, Breakthrough Fuel said, adding that major oil terminals along the coast have suspended or severely limited operations, which has halted movement of product by sea.

“The lasting impacts of the storm will be determined in the coming days as the full extent of rainfall to the Houston area is realized,” the firm said.

So, what is the actual forecast for the area, which is still being drenched by Harvey’s rains, which could total 50 inches in some areas before the week is out?

According to the National Hurricane Center, Harvey continues to remain near or just off the Texas coast south of Matagorda with very heavy rain and flash flooding affecting southeastern Texas and southwestern Louisiana.

Riskpulse, a supply chain risk analysis firm, says that heavy rains are likely to continue across southeast Texas over the next five days before ending as Harvey finally moves out of the area. Some additional light rain is forecast for the 6-10 day timeframe.

“The greatest threat with Harvey continues to be its torrential rainfall, with some 10 inches of rain falling south of Houston overnight,” the firm says.

As of 5:20 a.m. local time, the highest rainfall total was 48.72 inches just south of Houston, Riskpulse says. “The heaviest rains during the past 24 hours were from the Houston metro area to western Louisiana including the Beaumont, Port Arthur, Lake Charles (LA) area, where 10-15 inches fell and major flooding is also ongoing.”

Harvey will continue to meander near the Texas Coast in and around Houston today and into tomorrow before the storm finally begins to move out of Texas/western Louisiana by Wednesday night and Thursday.

Rains in Houston will continue through tomorrow before ending. However, the danger is not over, as levees and dams in the area are at risk of overflowing today, which could exacerbate the flooding independent of the rain, Riskpulse says.

Most roads in the Houston area are closed due to flooding, and Riskpulse believes they may remain that way as a second part of the storm affects the area later this week.

“Stage 2 will be the river crests and this will occur in most areas late this week and over the holiday weekend; some crests will occur beyond the Labor Day Holiday weekend especially in portions of Louisiana,” the firm notes. “Hence, the flood impacts will continue beyond the holiday weekend. Both stages will be historic in nature. Most interstates in the Houston metro area are impassable and likely will remain that way for the next few days.”