The Economic Consequences of Katrina

[chequita guevara]

Let's leave aside the immediate cost of damage, an estimated $25 billion in insured property and $16 billion in uninsured property. Let's ignore the fact that several million people are temporarily displaced and suddenly unemployed.

What will be the long term consequences of the storm.

First, there's the shut down oil production. It's sending gas prices spiking. It will increase the cost of transporting everything, like food, for example.

Rebuilding is going to kill the housing boom, as demand for building materials and construction crews in the affected areas is going to explode.

Port shipping in other areas will increase. Ft. Lauderdale already expects to pick up the banana shipments that used to go through Biloxi.

Agriculture in the effected areas is likely to be completely disrupted. I imagine cotton will become more expensive.

What other effects do you see?

[Whoha]

Probably just the exacerbation of existing problems. I would hope that we'll resolve these, but we'll most likely continue to bandaid them.

[Sava]

on the radio, I heard an interview of an EPA spokesperson saying the entire GDP of the United States is not enough to clean up the environmental contamination of this disaster...

even if (maybe when) New Orleans is drained, the Gulf area around it will be contaminated for a decade...

[chequita guevara]

Jesus.

The Gulf is cleaned out by the Gulf Stream, which means that the waters off Florida are going to be polluted as well.

[VetLegion]

Contaminated with what?

[lord of the mark]

Gas prices are spiking not cause of the loss of oil production (the opening of the Strat Pet Reserve has restored order to the markets for crude) but due to the loss of key pipelines that carry gasoline from areas west of NO to the east. and to the loss of refinery capacity - there were 9 refineries in the NO area,IIUC, and 8 are shut.

One normally expects a spike in the prices of lumber and building materials, but I wonder if the delays in making reconstruction possible will dampen that.

Most important is loss of the port. Import items, like coffee and bananas, can be shifted relatively easily, as they move inland by truck anyway. The biggest issue I expect, after the energy related ones, is export grain.

[chequita guevara]

Originally posted by VetLegion
Contaminated with what?

The area along the lower Mississippi is known as Cancer Alley, because of all the petrolium distilleries and chemical plants. All that crap is likely washing out into the ocean right now. In addition, chemicals from farms are running out into the coean because of the extensive rainfall and flooding. Plus all the wrecked boats leaking fuel, plus all the household chemicals, and god knows what else.

[Adam Smith]

Originally posted by Sava
on the radio, I heard an interview of an EPA spokesperson saying the entire GDP of the United States is not enough to clean up the environmental contamination of this disaster...

even if (maybe when) New Orleans is drained, the Gulf area around it will be contaminated for a decade...

The same quotes appeared in the Washington Post this morning. This is truly irresponsible **** on the part of a government official with an axe to grind. The guy who said this was one of the authors of the EPA's Superfund legislation. He has consistently been pushing for Superfund sites to be cleaned up until there is "no additional risk" from the site, even though courts, Congress, and his superiors have told him otherwise.

Use of the "no additional risk" standard has lead to truly stupid decisions. For example, in one train derailment near a school in Marshville, NC, the site had to be cleaned up until a child from the school could eat dirt from the site every single day he attended school and have no additional risk of cancer. If you insist on cleaning up to this standard, then sure the entire US GDP wouldnt be enough to clean it up. But the law of diminishing returns, common sense, and, fortunately, the courts, have said we can do a quite capable job of cleaning up for considerably less.

PS: The guy who said this, repeatedly, should be fired.

Edit:
As of 7 pm last night, there has been one leaking oil barge and two leaking railroad tank cars identified.

[Kuciwalker]

Re: The Economic Consequences of Katrina

Originally posted by chegitz guevara
Rebuilding is going to kill the housing boom, as demand for building materials and construction crews in the affected areas is going to explode.

Wouldn't this increase the prices of houses further by restricting supply?

[Tingkai]

Well, there's got to be a way to make some money out of this. Maybe some stocks will see some good price drops. One can only hope.

[Winston]

Having Adam Smith present to inject some sense into the various wild claims popping up.

[DanS]

I would be interested in hearing AS talk about the rail and port links.

As I understand it, most of the goods coming in on the Gulf Coast go through Houston and can be rerouted around NO. Is this correct?

It still seems that we can't get a good assessment of the oil port and the refineries.

[Adam Smith]

Originally posted by DanS
I would be interested in hearing AS talk about the rail and port links.

As I understand it, most of the goods coming in on the Gulf Coast go through Houston and can be rerouted around NO. Is this correct?

A good chunk of that has been brewing on my hard drive since this morning, so I can't really talk about it ... just yet.

[DanS]

[Patroklos]

Tampa also has a very large port, without having to add too much time to ship routes.