Why the Storms in Houston Will Affect the Price of a Big Mac in Seattle

Why the Storms in Houston Will Affect the Price of a Big Mac in Seattle

You may be paying more for your Big Mac as well as many other consumer goods as a large storm continues to hit parts of the Gulf Coast with historically heavy rains. Large parts of the energy and petrochemical industries are based there and companies with a lot of stores in the area stand to lose business. While gas price spikes will be temporary, other effects of the storm will last for years.

The tropical storm, which made landfall in Texas Friday, is expected to continue for days, and the National Weather Service says some parts of Houston and its suburbs could get as much as 50 inches of rain. The weather shut down much of Texas’ oil and gas industry, and S&P Global analysts said about 2.2 million barrels per day of refining capacity was down or being shut down by Sunday.

“There will be ripple effects that everyone is going to feel,” said Jack Ablin, chief investment officer for BMO Capital Markets. He said that could include higher insurance premiums, as the storm is likely to cause tens of billions of dollars in flood damage. Ablin added that the storm might affect interest rates as well, as the Federal Reserve might hesitate to raise interest rates if they think the storm will slow the economy significantly.

Moreover, with gas prices expected to spike, cost to deliver goods will rise. Millions of items are trucked across the nation every day, and even a small spike in the cost of petroleum can have  profound impact in sectors throughout the country.