New Orleans in Trouble
Been up listening to radio reports and surfing the web for info about Hurricane Katrina.
As I used to live in New Orleans, the storm is definitely worrying. I'd been away all weekend and hadn't heard much about it until Sunday night, when I saw that they had closed the LOOP (the offshore oil terminal), abandoned several thousand oil rigs in the gulf, and were evacuating New Orleans. A lot of that infrastructure might well be destroyed.
For months everybody's been saying that the lack of excess refining and pumping capacity in the oil market left no room for a shock, but I think people generally had shocks of the terrorist/war kind in mind. However, the amount of supply shut down the Gulf is about equal to current global spare capacity. Oil is duly up 7% overnight at $70.80, NG is up 20%, and gasoline futures are going nuts, too. (Someone suggested that those who are long oil futures or royalty trusts, etc, might want to consider donating some of their profits to the reconstruction of New Orleans if needed. That's not a bad idea; the problem with betting on Pure Doom is that you benefit when things, like peoples' lives, otherwise go completely to shit.)
Anyway, there may be more problems on the horizon: there's supposedly another storm building behind Katrina, and of course all the geopolitical risk is still out there. Depending on the damage done in the next day or so, I have to wonder how much more the global economy--or at least the US economy--can take before some serious economic damage comes.
Before Katrina, Americans were spending about $250 billion more on gasoline this year than last--about $1000 per person, or perhaps a few G's per family. That money obviously now won't get spent on discretionary purchases like Xboxes, furniture, vacations, etc. Also, for families with a fairly low income and a bunch of engines (and kids) to feed and drive around, that's a significant chunk of change out of pocket--and it's probably just going to get worse. The fact that the money won't go towards purchases means businesses will suffer, which means higher unemployment, which means lower consumer spending, which means businesses will suffer, etc, etc, etc. If the gov't tried to cap gasoline prices, that would just drive them up in the long run. If they opened the strategic reserve, that wouldn't mitigate the damage much, we'd be even less secure in our energy supplies, and we'd probably have to buy it all back at higher prices. To me, being long oil is a hedge against the damage the energy situation stands to do.
Still, I can't get my mind off the New Orleans situation, that is, the place and the people who live there. It's one of the precious few truly unique cities in America, but it's below sea level and surrounded by refineries and chemical plants. I don't imagine it's easy to move chemical plants to high ground. If the damage and flooding is as bad as they say it might be, NOLA could be turned into more or less a toxic dump (it's pretty polluted as it is).
I've been in some serious storms there. One night it rained 18" or so and submerged the whole city in several feet of water. Manhole covers were popping out, electric lines were in the water where people were swimming house to house and bar to bar, and entire lots of cars were swept up and destroyed. The whole first floor of the city was submerged in scum. But it was just rain, not hurricane-force winds. Most of the people I know just got blacked-out drunk and made the best of the occasion, then cleaned up later.
But this one could be a lot worse, it seems. I hope the authorities are wrong and crying wolf, but this time, it sounds like they might not be. Check out the following excerpt from a weather advisory from the National Weather Service. There have also been predictions of the city's above-ground cemeteries being broken wide open. What a mess that would be, and a shame...
DEVASTATING DAMAGE EXPECTED.
AT LEAST ONE HALF OF WELL CONSTRUCTED HOMES WILL HAVE ROOF AND WALL FAILURE. ALL GABLED ROOFS WILL FAIL...LEAVING THOSE HOMES SEVERELY DAMAGED OR DESTROYED.
THE MAJORITY OF INDUSTRIAL BUILDINGS WILL BECOME NON FUNCTIONAL. PARTIAL TO COMPLETE WALL AND ROOF FAILURE IS EXPECTED. MANY WOOD FRAMED LOW RISING APARTMENT BUILDINGS WILL BE DESTROYED. CONCRETE BLOCK LOW RISE APARTMENTS WILL SUSTAIN MAJOR DAMAGE...INCLUDING SOME WALL AND ROOF FAILURE.
HIGH RISE OFFICE AND APARTMENT BUILDINGS WILL SWAY DANGEROUSLY...A FEW POSSIBLY TO THE POINT OF TOTAL COLLAPSE. MANY WINDOWS WILL BLOW OUT.
AIRBORNE DEBRIS WILL BE WIDESPREAD...AND MAY INCLUDE HEAVY ITEMS SUCH AS HOUSEHOLD APPLIANCES AND EVEN LIGHT VEHICLES. SPORT UTILITY VEHICLES AND LIGHT TRUCKS WILL BE MOVED. THE BLOWN DEBRIS WILL CREATE ADDITIONAL DESTRUCTION. PERSONS...PETS...AND LIVESTOCK EXPOSED TO THE WINDS WILL FACE CERTAIN DEATH IF STRUCK.
POWER OUTAGES MAY LAST FOR WEEKS...AS MANY POWER POLES WILL BE DOWN AND TRANSFORMERS DESTROYED. WATER SHORTAGES WILL MAKE HUMAN SUFFERING INCREDIBLE BY MODERN STANDARDS.
THE VAST MAJORITY OF NATIVE TREES WILL BE SNAPPED OR UPROOTED. ONLY THE HEARTIEST WILL REMAIN STANDING...BUT BE TOTALLY DEFOLIATED.
As I used to live in New Orleans, the storm is definitely worrying. I'd been away all weekend and hadn't heard much about it until Sunday night, when I saw that they had closed the LOOP (the offshore oil terminal), abandoned several thousand oil rigs in the gulf, and were evacuating New Orleans. A lot of that infrastructure might well be destroyed.
For months everybody's been saying that the lack of excess refining and pumping capacity in the oil market left no room for a shock, but I think people generally had shocks of the terrorist/war kind in mind. However, the amount of supply shut down the Gulf is about equal to current global spare capacity. Oil is duly up 7% overnight at $70.80, NG is up 20%, and gasoline futures are going nuts, too. (Someone suggested that those who are long oil futures or royalty trusts, etc, might want to consider donating some of their profits to the reconstruction of New Orleans if needed. That's not a bad idea; the problem with betting on Pure Doom is that you benefit when things, like peoples' lives, otherwise go completely to shit.)
Anyway, there may be more problems on the horizon: there's supposedly another storm building behind Katrina, and of course all the geopolitical risk is still out there. Depending on the damage done in the next day or so, I have to wonder how much more the global economy--or at least the US economy--can take before some serious economic damage comes.
Before Katrina, Americans were spending about $250 billion more on gasoline this year than last--about $1000 per person, or perhaps a few G's per family. That money obviously now won't get spent on discretionary purchases like Xboxes, furniture, vacations, etc. Also, for families with a fairly low income and a bunch of engines (and kids) to feed and drive around, that's a significant chunk of change out of pocket--and it's probably just going to get worse. The fact that the money won't go towards purchases means businesses will suffer, which means higher unemployment, which means lower consumer spending, which means businesses will suffer, etc, etc, etc. If the gov't tried to cap gasoline prices, that would just drive them up in the long run. If they opened the strategic reserve, that wouldn't mitigate the damage much, we'd be even less secure in our energy supplies, and we'd probably have to buy it all back at higher prices. To me, being long oil is a hedge against the damage the energy situation stands to do.
Still, I can't get my mind off the New Orleans situation, that is, the place and the people who live there. It's one of the precious few truly unique cities in America, but it's below sea level and surrounded by refineries and chemical plants. I don't imagine it's easy to move chemical plants to high ground. If the damage and flooding is as bad as they say it might be, NOLA could be turned into more or less a toxic dump (it's pretty polluted as it is).
I've been in some serious storms there. One night it rained 18" or so and submerged the whole city in several feet of water. Manhole covers were popping out, electric lines were in the water where people were swimming house to house and bar to bar, and entire lots of cars were swept up and destroyed. The whole first floor of the city was submerged in scum. But it was just rain, not hurricane-force winds. Most of the people I know just got blacked-out drunk and made the best of the occasion, then cleaned up later.
But this one could be a lot worse, it seems. I hope the authorities are wrong and crying wolf, but this time, it sounds like they might not be. Check out the following excerpt from a weather advisory from the National Weather Service. There have also been predictions of the city's above-ground cemeteries being broken wide open. What a mess that would be, and a shame...
DEVASTATING DAMAGE EXPECTED.
AT LEAST ONE HALF OF WELL CONSTRUCTED HOMES WILL HAVE ROOF AND WALL FAILURE. ALL GABLED ROOFS WILL FAIL...LEAVING THOSE HOMES SEVERELY DAMAGED OR DESTROYED.
THE MAJORITY OF INDUSTRIAL BUILDINGS WILL BECOME NON FUNCTIONAL. PARTIAL TO COMPLETE WALL AND ROOF FAILURE IS EXPECTED. MANY WOOD FRAMED LOW RISING APARTMENT BUILDINGS WILL BE DESTROYED. CONCRETE BLOCK LOW RISE APARTMENTS WILL SUSTAIN MAJOR DAMAGE...INCLUDING SOME WALL AND ROOF FAILURE.
HIGH RISE OFFICE AND APARTMENT BUILDINGS WILL SWAY DANGEROUSLY...A FEW POSSIBLY TO THE POINT OF TOTAL COLLAPSE. MANY WINDOWS WILL BLOW OUT.
AIRBORNE DEBRIS WILL BE WIDESPREAD...AND MAY INCLUDE HEAVY ITEMS SUCH AS HOUSEHOLD APPLIANCES AND EVEN LIGHT VEHICLES. SPORT UTILITY VEHICLES AND LIGHT TRUCKS WILL BE MOVED. THE BLOWN DEBRIS WILL CREATE ADDITIONAL DESTRUCTION. PERSONS...PETS...AND LIVESTOCK EXPOSED TO THE WINDS WILL FACE CERTAIN DEATH IF STRUCK.
POWER OUTAGES MAY LAST FOR WEEKS...AS MANY POWER POLES WILL BE DOWN AND TRANSFORMERS DESTROYED. WATER SHORTAGES WILL MAKE HUMAN SUFFERING INCREDIBLE BY MODERN STANDARDS.
THE VAST MAJORITY OF NATIVE TREES WILL BE SNAPPED OR UPROOTED. ONLY THE HEARTIEST WILL REMAIN STANDING...BUT BE TOTALLY DEFOLIATED.
posted by HAKKIN£N!!!!!!!!!!!!! at 03:46
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