BY JOE BRISBEN
Minute-by-minute television coverage of Hurricanes Katrina andRita in September made an incredible impression on viewers from coast to coast.The damage will have an impact on the U.S. economy for months and even yearsto come.
I am still affected by what happened to my cousin Janet Caldwell in Long Beach,Mississippi. Just has Katrina was swooping down on her home, she was on thetelephone with her sister Debbie Lockard in Mobile, Alabama.
“Hey!” Janet suddenly shouted. “There’s water comingin under my door!” Then the telephone went dead. To make a long storyshort, two days went by before she could get back in touch with anyone in thefamily.
This was after the storm not only destroyed her home but also the two smallbusinesses where she and her husband worked.
Let’s look at the big picture: The two hurricanes stopped productionat refineries in Louisiana and Texas that produce, according to the LundbergSurvey, 20 percent of the nation’s gasoline and natural gas. They causedprices at the pump, already under pressure from shortages, to soar across thenation from about $2.50 a gallon to more than $3.25. It was even worse fornatural gas, which has doubled in price from a year ago.
Damage to the ports particularly of New Orleans but also Houston, Galveston,and Port Arthur has hindered shipping all the way up the Mississippi Riverto Memphis, St. Louis, the Quad Cities, and Minneapolis. It also affected trafficon the Ohio River to Pittsburgh and the Missouri up through Omaha and SiouxCity.
This concept underscores why Thomas Jefferson wanted the U.S. to buy Louisianaand why Andrew Jackson defended New Orleans during the War of 1812.
The Mississippi and Missouri Rivers bracketing Iowa conjure thoughts of whatthose hurricanes have done to our state. In addition to fuel costs particularlyduring harvest, farmers will be faced with fertilizer prices that also havedoubled. Natural gas is a significant component of fertilizer.
The hindrance of barge traffic on those three rivers has had a deflating impacton the price of corn, soybeans, wheat, and other grains. While those commoditiescan be shipped via truck and train, those methods require costly fuel.
Moreover, natural gas powers many of our nation’s electrical utilities,so the cost of electricity could climb for businesses and consumers.
Still, the aftermath of the two hurricanes provides a silver lining for theeconomy and investors alike. Dirt will have to be moved. Roads, sewers, docks,levees, utilities, buildings, and other forms of infrastructure will have tobe repaired and rebuilt.
Energy companies will be retrofitting refineries and oil and natural gas installationsand searching for new resources.
I don’t mean to make light of two catastrophic storms that destroyedthe lives and homes of people, but there is a silver lining to this story.Don’t take my word for it. See your friendly neighborhood investmentadviser and find out if he or she agrees.
The money from the government and insurance companies will pour into the economyfor months to come. So look for the markets to be rising for most, if not all,of 2006.
In keeping with the theme of this issue, I should also point out that HurricanesKatrina and Rita give the Gulf coast opportunities to reinvent itself. Thesun shines profusely in the South, so there are opportunities to harness solarenergy. We don’t need to be reminded of how the wind blows there, sothe same is true of wind power.
At the Nextfest Festival in Chicago last July, I saw a wind generator thatautomatically adjusts the angle of its blades so that it can produce whetherthe wind is a puff or a gale force. The Gulf coast is perfectly suited forit.
If California can construct buildings that can withstand earthquakes up toa certain magnitude, the South can do the same with buildings that can endurehurricanes. The examples can go on and on.
Given sufficient faith, resources, leadership, hard work, and ingenuity (andmy cousin Janet Caldwell agrees with me), the South shall rise again.