Business Owners Begin Reopening After Ike
By David Koenig and Stephen Manning
AP Business Writers
September 14, 2008
CBNNews.com - As Hurricane Ike faded and rain clouds eased, business owners along the Texas Gulf Coast began returning to their shops and offices Sunday to size up their rebuilding job.
The early betting line was that damage wasn't as bad as feared.
Before the storm made landfall Saturday morning, forecasts ranged from $8 billion to $25 billion, but then the storm's path spun away from the heart of Houston's ship channel and refining and chemical plants.
Howard Mills, insurance adviser to the consulting firm Deloitte LLP, said the early forecasts were "a little bit high."
"Houston is a mess, but not as bad as it could have been if the surge had gone up that ship channel," Mills said. "But you're still looking at very significant business-interruption losses. The power outages in downtown Houston alone are a problem."
Houston, the nation's fourth-largest city, is the center of the U.S. energy and petrochemical industries. Many large corporations and smaller businesses operate from its downtown skyscrapers, many of which were damaged by Ike's high winds.
Beyond Texas, Ike's most obvious impact was being felt at the gas pump. With more than a dozen Gulf Coast refineries shut down, prices surged above $5 a gallon in some places and the nationwide price for regular rose more than 6 cents to $3.795.
Power outages were slowing efforts to restart the refineries. Valero Energy Corp. said only one of its closed refineries had power, and spokesman Bill Day said he couldn't estimated how long it would take to resume production.
If refineries are unable to restart swiftly, that could also push up fuel prices for airlines, railroads and trucking companies.
Oil companies tried to head off charges of price-gouging.
Darci Sinclair, a spokeswoman for the U.S. subsidiary of Royal Dutch Shell PLC, said pump prices were due to several factors. She said many oil companies were buying fuel on spot markets because of lost production at their own facilities, and that Gulf Coast spot prices jumped $1.60 just before Ike hit.
Sinclair said Shell was encouraging dealers and wholesalers "to price responsibly."
Chemical company BASF said its six local plants avoided major damage and the largest had power.
Officials at the port of Houston, an economic engine for the region, said they would decide later Sunday night whether to reopen on Monday. It all depends on the restoration of power - which was still out Sunday morning - and a green light from the Coast Guard, which was still checking the Houston ship channel for any submerged objects that might have been swept into the shipping lanes.
Air service to Houston was suspended Sunday - airlines had originally hoped to resume flights by then, but Continental Airlines Inc. said it was aiming for a Monday reopening at Houston's George Bush Intercontinental Airport.
At the height of the hurricane, Houston-based Continental ran much of its network from an underground emergency bunker in suburban Montgomery County, the Houston Chronicle reported.
Southwest Airlines Co. canceled Sunday flights to Houston's Hobby Airport and said service in Corpus Christi and Harlingen - hundreds of miles from where the eye of Ike hit the Texas coast - would be "very limited."
In downtown Houston, about 60 miles inland from the Gulf, streets were littered with glass from broken windows, and officials told people to stay home.
Tenants in the 75-story JPMorgan Chase Tower, the tallest building in Texas, could only assess damage from afar - they weren't able to get in - but many of the windows were blown out.
"Broken windows are very expensive," said Tom Larsen, senior vice president of EQECAT Inc., which provides storm-damage forecasts for insurance companies. "Water gets in, so you wipe out all the walls, all the ceilings, all the computers."
Law firm Andrews Kurth LLP, headquartered in the JPMorgan tower, planned to farm out its 250 lawyers based there to other locations in Texas early this week, said Ashley Ronald, the firm's senior marketing manager. She said the firm's legal work wouldn't be affected by the storm.
"All of our BlackBerrys are working," she said.
Another law firm in the tower, Locke Lord Bissell & Liddell LLP, didn't expect to reopen until at least Wednesday.
More than 3 million people in Texas lost power during the storm, and although utilities scrambled to restore service, some areas of Houston could be without electricity for weeks, officials said.
Larsen, the EQECAT executive, said after big storms most businesses are back running within a week. His firm was sticking with its pre-landfall forecast of $8 billion to $18 billion in damage.
"Financially, this was a big storm," he said.
Residents and business owners deluged insurance companies with calls.
Nationwide Financial Services Inc., one of the smaller insurers in Texas, had received more than 5,000 claims by midday Sunday. Associate vice president Tracy Thaxton said the company's call centers expected 8,000 calls Sunday - 2,500 would be normal - and even more in the days ahead as people return to storm-hit areas.
AP Business Writer David Koenig reported from Dallas and Business Writer Stephen Manning reported from Washington.
Copyright 2008 by The Associated Press. All Rights Reserved.
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