What's going on?

An important measure of US gasoline prices hit a two-year high on Monday as investors attempted to gauge how much damage Hurricane Harvey will have caused to the country�s fuel production and distribution facilities.

What does this mean?

Southeast Texas (where Hurricane Harvey is hitting hardest) is home to America�s largest oil refineries, which take crude oil and process it into the fuel used in cars and planes. Almost 15% of the country�s total refinery capacity has been shut down, meaning some 2.2 million barrels of oil won�t go to market as planned (and that number could rise further if flooding persists).

Why should I care?

For markets: Less production of gasoline means less supply � and higher prices.

The price that US gas stations have to pay for their gas (a.k.a. wholesale prices) hit a two-year high on Monday (although it dropped back down moderately as the day went on). That should feed into higher prices at the pump over the coming weeks (in the US, at least).

The bigger picture: Extreme weather can have significant economic consequences.

Hurricane Harvey will likely join a growing list of exceptionally disastrous hurricanes that have hit the US in recent years, such as Hurricane Sandy and Hurricane Katrina. US economic growth halved in the quarter after Hurricane Katrina landed on Louisiana’s shores; however, it�s currently estimated that Harvey�s damage, while still significant, won�t be as devastating.