The media has an incredible ability to overlook facts. Once again we are told, well, the same thing we were told about Hurricane Katrina in 2005. Let me refresh your memory with this reminder from Robert Prechter's Socionomic Theory of Finance.

Hurricane Harvey is heading toward the Gulf Coast and became a Category 4 hurricane by Friday.

The storm's track, while still unpredictable, appears to be heading south of Houston but could dump 12 to 20 inches of rain or more across a broad area of the Texas coastline.

The coastline between Corpus Christi, Texas and Lake Charles, La. is home to about a third of U.S. refining capacity.

Gasoline futures jumped Thursday, and traders expect more upward pressure as the storm gets closer to Texas. Oil prices, however, fell because refiners may use less supply due to the storm.

CNBC Market Insider 8/23/2017

The media has an incredible ability to overlook facts. Once again we are told, well, the same thing we were told about Hurricane Katrina in 2005. Let me refresh your memory with this reminder from Robert Prechter’s Socionomic Theory of Finance.

Katrina shut down 95 percent of crude production and 88 percent of natural gas output in the Gulf of Mexico. This amounted to a quarter of total U.S. output. About 735 oil and natural gas rigs and platforms had been evacuated due to the hurricane. The price of oil fluctuated greatly. According to [a spokesman on the scene], "half billion dollars a day of oil and gas is unavailable. Hurricane Katrina will impact oil and gas infrastructure, not just short term but long term as well." The storm interrupted oil production, importation, and refining in the Gulf, thus having a major effect on fuel prices.

Then as now, the headlines conjured up visions of gasoline shortages with energy prices racing skyward. Except that is not what happened.

West Texas Intermediate did spike to $70.85 as Katrina hit on August 29, 2005. And then, price declines 21.8 percent over the next two months to $55.40. Two years later oil prices were about the same as when Katrina hit New Orleans.

The point here is that exogenous or external events do not determine prices of securities or commodities. Oil surged to $145 in 2008 on speculation, not shortages. Oil stayed over $100 well into 2014 on all sorts of wild-eyed rationalization like, the price has to be high to pay for the cost of fracking! Once the realization set in that there was no lack of oil, in fact more was produced than used, prices collapsed to $25 in February 2016.

But we don’t lack for all sorts of interesting natural phenomenon. George Carlin speculated that we don’t cause climate change. The earth simply puts up with us and then answers back, think Pompeii Mount Vesuvius in 79 AD. At the moment we have

> Hurricane Harvey in the Gulf of Mexico.

> Typhoon Hato leacves12 dead in Macau.

> Hato then moved on to Hong Kong.

> An earthquake shook the Italian island of Ischia.

> America experienced the first solar eclipse in over 90 years.

Sometimes physical events do affect financial markets but for now things are calmer on Wall Street than in Corpus Christi.

Monday August 28, update:

Sure enough at 11 a.m. this morning crude oil has dropped $1.64 even though several major refineries on the Gulf Coast are closed.

Will Rogers used to say that he was not a comedian.Rather, he read what Congress was doing in the newspapers and then reported on it! One might say the same today.

We have a president who is apparently independent of even his own party. He tweeted, why not tie raising the debt ceiling to passing the popular VA bill, bingo, job accomplished. Well indeed why not? Yet the same news media worrying that Harvey will permanently raise oil prices, frets over the debt ceiling, and whether the government might shut down if the ceiling is not raised.

But the so-called debt ceiling has been raised 20 times since 1993. Often the raise was included in bills that addressed other issues, just as Trump suggested.

Why fear a government shut down? After promising repeal and replacing the Affordable Care Act for six years, the Republican majority failed to do so. The same politicians who could not do that now promise tax reform.

Gee, seems to me that if the majority party cannot deliver on a six year old promise, the government is already shut down, or am I missing something?

Follow Dennis at http://www.themarketperspective.com