Wildfires Burning Across Western USA

Photo courtesy of the US Department of Agriculture

This year has been a hard one when it comes to natural disasters. Florida, Texas, the Caribbean and beyond were devastated by Hurricane Irma. Southeastern Texas, Louisiana and more suffered from the winds, rain and flooding caused by Hurricane Harvey. In Southeast Asia floods caused by monsoon rain have forced millions to flee and resulted in over 1,000 deaths. But water and wind are not the only deadly vectors mother nature can unleash.

In the United States the western states of California, Oregon, Montana, Washington and more have been enduring raging, fast spreading wildfires producing smoke and ash extending far beyond the confines of the fires themselves. As of September 14, almost 2 million acres were burning, an amount of land equivalent in area to the states of Rhode Island and Delaware put together. That area includes 41 un-contained large blazes under attack by a force of National Guard responders numbering over 25,000; half a battalion of soldiers.

Those two million acres now in flames is only a fraction of the 8 million that has already burned so far this season. More than 500 homes have also been destroyed, and the Forest Service has spent over $1.75 billion fighting these fires this fiscal year. The Interior Department has spent over $391 million.

In ordinary years the autumn would bring relief from summer-prone wildfires, but this year there seems to be no end in sight. One of the explanations for the severity and length of the fires is the severe drought that Montana, Oregon and elsewhere have seen this year. Record high temperatures over the summer completely dried up any regions that had been soaked with snow and rain last winter and spring.

Bitcoin’s Value Doubled in August

Bitcoin reached its highest price in its short history when it doubled in value in just one month.

During the month of August Bitcoin went from a price of $2788 on August 1st, 2017 to $4564 on August 31st, and it wasn’t finished heading for the stars quite yet. On September 2 bitcoin reached a high of $4780, before it started to crash, losing about 15% in just a bit over a week. As of September 11th, one bitcoin costs $4106.

Overall this year bitcoin has grown by 358%, starting slowly in January, but then really taking off in March this year, when it began climbing from just under $1000 on March 24th, and just kept going.

Listen to one commentator’s analysis of this investing phenomenon. Is it a bubble, or isn’t it?

 

Houston Mayor Says Flooded City Ready for Business

Saying Labor Day is the deadline, Houston’s Mayor Sylvester Turner says his city, America’s fourth-most populated, will be “open for business” despite mandatory evacuations of flooded homes, billions of dollars in damage, and many parts of town still under water due to Hurricane Harvey, which made landfall in south east Texas on August 25th, 2017.

“Anyone who was planning on a conference or a convention or a sporting event or a concert coming to this city, you can still come,” the mayor said to CBS. “We can do multiple things at the same time.”

Officials are still worried about explosions at a chemical plant damaged by the hurricane, the country’s most devastating in ten years. To ease the danger of further explosions experts performed a controlled burn last Sunday of extremely volatile compounds at the Arkema facility in Crosby. After Harvey’s flooding knocked out generators three trailers caught fire.

The authorities stated that they are continuing to monitor the air quality within a mile and a half radius of the plant, which is outside Houston. People within the vicinity of the chemical plant have still not returned to their homes.

In addition, floodwaters have overcome at least five toxic waste Superfund locations close to Houston, with the possibility that some may have sustained damage. The Environmental Protection Agency has not yet assessed the full extent of the damage.

Hurricane Harvey Forces Closure of Largest US Oil Refinery

The devastation wrought by Hurricane Harvey and its unprecedented flooding has forced several oil refineries to partially or completely close, including America’s largest. Harvey’s ferocious winds and rain forced the Motiva refinery in Port Arthur to close. The plant has the capacity for 603,000 barrels/day. According to the Wall Street Journal the refinery began closing operations at about 5am central time on Wednesday “in response to increasing local flood conditions.” The giant Saudi Arabian oil company Saudi Aramco is the owner of Motiva. Production of oil had already slowed to 60% of capacity on Tuesday.

As of Wednesday morning, about 18 refineries were at least partly closed in Texas, including those located at Port Arthur in Houston.

“The largest impact to energy markets is severe flooding, which has resulted in the closure or part-closure of nearly 25% of the United States’ refinery capacity,” analysts wrote.
“As Harvey heads inland once again, we note a number of refineries in its current trajectory will be under threat,” they added. “This could close up to another 824,000 barrels per day (b/d) of capacity, giving an additional lift to fuel prices, while further depressing crude.”

The hurricane has had more of an impact on refining than on production, which has caused a strange fluctuation in oil prices compared to gasoline prices, which have gone up compared to oil.

Usually oil prices climb in response to extreme weather that hits areas with high concentrations of oil businesses. But prices of oil have fallen recently: West Texas Intermediate crude oil was down 1.1%, at $45.94/barrel. But US gasoline futures went up to their highest level since July 2015.

As refineries close due to damage, or workers are unable to reach their jobs; or it becomes difficult or impossible to move the gasoline out, a lack of demand for oil is created. This leads to more oil in storage, waiting to be refined, thereby forcing prices down. At the same time refiners can’t produce and distribute gasoline and other refined oil products, lowering supply and forcing prices up.

This explains why, when usually the price of oil and gas go up and down together, the unique circumstances caused by Hurricane Harvey has caused oil and gasoline prices to travel independently and in opposite directions.

Inventories Up: Economy Moving Forward

June’s data show that US business inventories realized their largest increase in seven months as retailers continue to re-stock at an accelerated pace in reaction to an increase in demand for goods at home.

According to the Commerce Department business inventories climbed by 0.5 percent after an unrevised increase of 0.3 percent in May.

Inventories are considered an important component of the country’s gross domestic product. Retail inventories did even better, rising by 0.6 percent in June and the same percentage in May.

Stock of motor vehicles surged by 0.7 percent after an even higher rise of 1.2 percent in May.

Retail inventories, not including cars, which are included in the calculation for GDP, went up 0.5 percent, up from 0.2 percent in May.

Inventory investment did not have an impact on the 2.6 percent annualized growth rate of the second quarter of this year, after severing off 1.46 percentage points at the beginning of the year.