I bet you thought I was going to stomp into the minefield of gender politics with that headline, but I’m not! While I have definite views on the differences between the sexes, having raised both a son and daughters, in this instance I’m referring to something completely different… storms.
Tropical Storm Imelda Wasn’t Like Hurricane Harvey
Tropical Storm Imelda just graced my neighborhood with quite a bit of rain. My little town, halfway between Houston and Galveston, situated on the west side of Galveston Bay, received 11.01 inches of rain. We had flash flood warnings blaring on our phones, which interrupted meals in restaurants and distracted shoppers in stores.
In other words, we didn’t really notice. There were times of heavy rain, but flooding? Not in my neck of the woods.
Hamshire, a small town about 65 miles inland, received just over 42 inches of rain, with 25 inches falling in just 12 hours. The water couldn’t drain quickly, so that area flooded.
Compare that with Hurricane Harvey in 2017. My little town got 42.3 inches of rain… and we were lucky. Totals for almost all towns within a 60-mile radius ranged from 28 inches to more than 52 inches. The storm dropped an estimated 15 trillion gallons of water, or enough to fill 27 million Olympic swimming pools.
We didn’t drive anywhere. Our home was an island on an island. Tens of thousands of people were displaced. It was a local disaster for homes, cars, and lives. But it was a national disaster for energy.
Energy is the Real Problem
I just wrote about oil last week after the drone attacks in Saudi Arabia. That incident drew international news, sent oil up 20% before it fell back a bit, and created anxiety through the energy markets. Tropical storm Imelda didn’t carry the same weight, but it should have made people a lot more nervous than it did.
Energy companies shut down a plant or two in the area during Imelda as a precaution. During Harvey, they all shut down because of leaks and the lack of workers. No one could get to the job site.
As America moves toward energy independence, storms along the Gulf Coast will take on greater significance for us and our trading partners. The less oil and gas we can move through this region, the less fuel we have for area refineries, and the less energy we have available for export.
There’s Good News…
The U.S. is now the largest oil and gas producer in the world. The International Energy Agency estimates the U.S. briefly surpassed Saudi Arabia as the largest oil exporter in the world in June, and should take that title for good within the next 24 months. Fracking drove a stunning reversal of fortune in the domestic energy sector over the last decade, and brought with it a change in how we view the world.
Texas and the Gulf Coast became much more important to our national economy, our trade deficit narrowed, we restarted raw oil exports, built the infrastructure for exporting natural gas, and became less interested in the fate of the Middle East.
Part of the change is down right enjoyable. I’m thrilled that our trade deficit is dropping as we buy less energy from overseas. And it’s not breaking my heart that we’re less dependent on, and less interested in, countries on the other side of the world that were happy to take our money for decades while hoping to wipe our way of life off the planet.
And There’s Bad News…
But there’s always a downside. The dramatic uptick in energy recovery and production means that storms targeting the Texas coast can be more crippling to our economy than before. We need better ways to move energy around the country, which at the moment means more pipelines. By increasing the number of places where we can deliver oil and gas, we can lessen the effects of a disaster in one area.
In Peak Income, Charles has invested in pipeline companies from time to time because they throw off great dividends. The industry has been under pressure along with energy prices, but it’s still worth a look. Pipelines combine two things most of us are looking for in a path to greater energy independence and income.
As for storms, they’ve rolled up on the Gulf Coast for as long as the coast has existed. We plan for them and take precautions, and there’s no difference between male and female names, as Katrina and Betsy proved. The scariest disaster is the one we don’t see coming, like a potential drone attack in the Houston area. Our resources aren’t nearly as concentrated as those in Saudi Arabia, but it would still send a chill through the markets, which is just one more reason to encourage geographic diversity.