The effect of the highly talked-about Hurricane Irma was weaker than feared in Florida but the level of destruction was still pretty high. The cost of the storm varies from analyst to analyst. As per the guardian, “the economic cost of Hurricane Irma could rise as high as $300 billion” as it ravaged homes, businesses and farms on its way up.
Insured losses from Hurricane Irma are projected from $20bn to $65bn, according to risk modelling companies, as per an article published on Financial Times. On the other hand, AccuWeather founder, “estimated that Hurricane Harvey is to be the costliest weather disaster in U.S. history at $190 billion or one full percentage point of the GDP.”
Damage estimate caused by Irma is expected to be about $100 billion or 0.5 percentage point of total GDP. AccuWeather estimates these two disasters (Harvey and Irma) will account for about 1.5 of a percentage point of the GDP.
That said, let’s discuss the key areas that call for attention right now for profits or losses.
Gasoline: Helped by Harvey, Marred by Irma
Harvey has thumped a quarter of oil production from the Gulf of Mexico and a substantial portion of the U.S. refining capacity. Lower demand from refineries put pressure on crude oil prices and ETFs like Oil Fund LP USO. However, demand for finished product gasoline rose, benefiting United States Gasoline Fund (UGA – Free Report) . As crack spread rose, VanEck Vectors Oil Refiners ETF (ung – Free Report) gained.
However, Irma weighed on natural gas futures by cutting demand from power plants, and will likely hurt oil and refined products’ prices by obstructing shipments to the nation’s third-largest gasoline market. Irma has quashed power to 3.3 million customers, brought tanker traffics to a halt and shut about 6,000 gasoline stations. United States Natural Gas Fund LP UNG was off 2.7% on Sep 8 and CRAK lost 0.2%.
