Hurricane Ida has finally passed into memory after making landfall in Louisiana and soaking much of the Eastern US with heavy rainfall. However, the effects of the storm are still being felt across the US in a number of ways:
- Gas prices: For many in the US, high gas prices were one way in which the effect of Hurricane Ida was evident: a significant number of refineries are located in Louisiana, all of which ceased operations in the wake of the storm. Prices for regular gasoline climbed as supplies fell and people in the path of the storm purchased fuel for their vehicles before temporarily evacuating.
- Diesel fuel prices: While few Americans fuel up with diesel, the trucks that carry consumer goods across the US almost exclusively rely on it. Thus, refinery shutdowns due to Ida meant that diesel fuel production was curtailed as well. This caused diesel prices to reach new highs – costs which will almost invariably be passed on to the consumer. Shoppers – who have seen high prices due to various pandemic-related supply chain issues – thus saw further price increases as shippers were forced to pay more to fill their trucks’ fuel tanks.
- Plastic resin costs: In addition to gasoline and diesel fuel, refineries also make the feedstocks used to make the plastics that, in turn, permeate nearly every corner of our lives. Thus, refinery shutdowns also affected resin supplies, with two plastic types – polyvinyl chloride (PVC) and polystyrene (PS) – most affected. PVC is used in a wide range of building materials (e.g., siding, doors, windows, wire and cable jacketing, low-slope roofing membranes); both PVC and PS are frequently used in packaging applications. Shortages of these resins thus would not only affect the housing market – at a time of elevated housing prices – but also impact the price of thousands of consumer products, from groceries to health and beauty products.
- Building materials: Building materials were already in short supply across the US due to a surging housing market and strong consumer interest in home improvement projects. Now, with thousands of homes and businesses across the nation damaged by Hurricane Ida, consumers are now facing a shortage of building materials as contractors scramble to perform needed repairs. Furthermore, even if materials are available, the workers needed to install them are also in short supply, further delaying repair and renovation projects.
Freedonia analysts will continue to monitor the ongoing effects of Hurricane Ida – as well as other severe weather events – on the US economy.
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