November 15, 2011
Recommendations from Rice University's Severe Storm Prediction, Education and Evacuation from Disasters (SSPEED) Center. But do we have enough financial clout to pull this off while financing an array of expensive urban boondoggles?
August 28, 2010
Never mind that there was no criminal penalty attached to anything Mr. Clemens is accused of using-if there were, Jose Canseco, who has written two books bragging about his use of steroids, would be serving time. Never mind, too, that when Mr. Clemens is said by his accusers to have used such substances, they weren't even banned from Major League Baseball: the Basic Agreement between the Players Association and owners forbidding the use of PEDs didn't take effect until 2004.
And let's disregard as irrelevant the judgment of baseball analysts such as David Ezra (author of "Asterisk: Home Runs, Steroids, and the Rush to Judgment") and J.C. Bradbury (author of "The Baseball Economist: The Real Game Exposed"), who have studied PEDs and Mr. Clemens's performance and found no statistical evidence that, even if he took PEDs, he gained any advantage from them. [. . .]
All that matters to the government is that, in February 2008, Mr. Clemens may have lied to a House committee on a matter the committee had no business poking its nose into in the first place. If there was no criminal penalty for using the drugs and if MLB and the union have agreed now to police their own house, why do the feds even care?
That's a good question, and one we all deserve an answer to before the government goes to the expense of putting Mr. Clemens on trial.
As I noted earlier, Clemens has not defended himself well. But the government's handling of the investigation into his conduct is far more egregious. Here's hoping that Clemens' jury sees it the same way.
October 10, 2008
A friend of mine who is a homebuilder in The Woodlands passes along the following regarding his experience in overseeing a crew rebuilding the neighborhood of his weekend home in Hurricane Ike-ravaged Galveston:
Just back from Galveston after 3 weeks. We suffered ancillary damage, but nothing structurally damaging. I went down with 80 rds of .40 cal and came back with a clip and a half.
Snakes have taken over the dunes for now. Devastation is everywhere and we are helping some 61 homes get their lives back together. I have simply never seen such damage.
When you drive over the Galveston Causeway Bridge, you are confronted with hundreds of boats of all sizes lining the road, the median and the bay. Most homes inside the seawall suffered 10 feet of flooding, especially in the historic Strand District. Downtown Beirut in the 1980’s looked better.
Moving to the seawall, the historic Balinese Room is gone. The Flagship Hotel lost its entry way and appears to be a total loss. Power and water are spotty -- I went 2 weeks without either. Traveling to our West End home is like driving through the Northeast after a winter storm -- sand is piled 10 feet high along both lanes and you sense you are in a fantasy winter wonderland.
Many properties immediately off the seawall are totally destroyed, sitting in the Gulf. You can literally walk under their foundations. Stench and foul orders are everywhere -- even the stoutest are easily overcome. It will be years, if ever, before Galveston will be restored or hopefully rebuilt to a higher standard. The homes built in the last 5 years according to the 160 mph wind standard suffered little damage, but most others were severely damaged or lost completely. Our crews have worked 16 hrs./day for 3 weeks to restore our neighborhood and are moving to help others at this time. The bright spot is that I have come to know my fellow homeowners in our neighborhood quite well.
The old site of the SeaArama Marineworld is now a landfill with three mounds that could easily fill the Astrodome. I have no idea what they will do with this matter as cranes are working 60’ above street level at this time. We have brought in heavy equipment and crews from The Woodlands to Junction, Texas. The cowboys from Junction say they have never seen rattlers so big.
We completely lost our dunes, which were over 15’ high. It now looks like we are seaside in Malibu.
Reporting from an R and R encampment, I remain . . .
And as bad as the damage is in Galveston, the devastation in Bolivar Peninsula to the northeast is even worse.
September 25, 2008
Clear Thinkers reader Charles Satterfield passes along these pictures of a trading office on the sixth floor of JP Morgan Chase Center, looking out toward the blown-out windows on the east side of JP Morgan Chase Tower (the tallest building in downtown Houston), taken shortly after Hurricane Ike blew out dozens of windows on the building's east side during the early morning of Saturday, Sept 13th. Going on two weeks after the storm, over half a million Houston area residents remain without power and about 250,000 have no running water.
September 18, 2008
Wednesday was a good day. Large areas of Houston -- including the area that includes my family's home -- had power restored. Our land phone lines were also restored on Wednesday after they had survived Hurricane Ike only to be knocked out during the severe thunderstorms that swept through Houston the night after the hurricane hammered the area. So, we're celebrating a bit tonight.
There are still large parts of Houston that have not had power restored, but my sense is that most areas other than the devastated coastal communities will have power restored by the end of the weekend. That will go a long ways toward getting life back to a semblance of normalcy in this neck of the woods.
Which leads to a point about the difference between hurricanes in Houston, on one hand, and areas such as New Orleans and Galveston, on the other. Most of Houston is at least 50 miles inland from the coast, so except for the southeast side of Houston that is close to Galveston Bay, the main risk of damage from hurricanes for most of Houston is from the wind.
In contrast, communities such as New Orleans and Galveston have to deal not only with damage from hurricane winds, but the even more devastating effects of flooding from the hurricane's storm surge.
Believe me, it's not pleasant living without power for the better part of a week. But my family and I had a livable home, natural gas for cooking, cell phones for communication, plenty of food and water, and autos for mobility and powering laptops and other equipment. I was able to work with little disruption between my home office and my "car office" whenever I needed Web access (because of spotty cell network coverage, I couldn't get Web access on my laptop air card from my home office -- I had to travel to a nearby part of town where the cell network signal was strong).
In the big scheme of things, that's not much inconvenience. And it's nothing compared to what many residents of the Louisiana-Mississippi Gulf Coast are still facing after Hurricane Katrina or what residents of Galveston and the other Houston coastal communities are facing for the foreseeable future.
September 17, 2008
FEMA, take note
Although The Woodlands did not suffer as much damage as many other parts of the Houston metropolitan area, it's interesting in my travels around town over the past several days that I have seen no evidence whatsoever of any federal relief.
For example, it seems to me that there are a couple of basic things that the federal government could do to facilitate recovery efforts. First, move as many portable generators to selected service stations throughout the region so that citizens can become somewhat mobile again. The primary problem at this point is not lack of gasoline. Rather, it's lack of power to operate the pumps to get the available gas into cars.
Even though large swaths of Houston remain without power, many areas are getting power back by the hour. Folks in areas without power can be much more productive if they can travel to areas that have it and work. Unfortunately, as it stands, there is no gas to get to those areas and then return home.
Another irritation is that no one in an official capacity attempts to do anything to facilitate communications for the citizens directly affected by a natural disaster such as Ike. Ever since the storm, cell phone usage has been spotty in most residential areas, and serviceable in only a few commercial areas. Perhaps damage to the cell network equipment is the cause of the poor service, but I haven't heard anyone contend that such is the case.
Just as the deadly hurricane of 1900 changed the nature of Galveston, my sense is that Hurricane Ike has done the same thing in 2008.
Prior to the 1900 hurricane, Galveston was Texas' largest city, port and commercial center. The devastation from that storm put into the motion the changes in Texas' development that resulted in Houston becoming the major port and cities such as Houston and Dallas-Ft. Worth becoming the major commercial centers. As Houston grew into this region's major center of commerce, Galveston evolved into a tourist center and a weekend beach getaway for folks in Houston.
Despite that tourism development, the City of Galveston has been slowly dying for years. Jobs and commercial activity largely revolve around the tourism industry (even the port is now owned by the Port of Houston Authority). Most young people now move away from the city after high school, so older folks constitute an unusually high percentage of the "town folk."
My sense is that Galveston will come back as a weekender community and a modest tourist vista, but that commerce not related to the tourism industry will continue to decline at an accelerated rate. My sense is that what we might see in 20 years is a community comprised of a few high-rise condos and resorts along the seawall, the ubiquitous weekender homes on the West Beach and not much else.
It will certainly be easier to evacuate such a community.
Radio anchor people
As a general rule, I do not listen to much radio. Maybe an occasional traffic report or Charlie Pallilo's sports talk show in the rare event that I am driving somewhere during it.
But I've been shocked at how bad the radio anchor reporters have been on KTRH, the main station providing disaster information to the public. Although a number of the KTRH field reporters are OK, the anchors often sound as if they are blithering idiots. It seems as if they aren't asking inane and non-challenging questions to "experts" or public officials, they laughing and making bad jokes at inappropriate times or in regard to serious issues.
Walter Cronkite, where are you when we need you?
Houston sports teams
I noted in this earlier post in the run-up to Hurricane Ike that the high number of variables that become involved in reacting to hurricanes often generates some abysmal decisions in reaction to the storm. That observation was certainly validated by a couple of decisions that were made with regard to Houston sports teams.
From University of Houston Athletic Director Dave Maggard's absurd decision to have the University's football team play in Dallas while the storm was still hammering Houston (!) to Major League Commissioner Bud Selig's equally preposterous decision to haul the Houston Astros players and coaches away from their families (to Milwaukee of all places) the day after a terrible natural disaster left the players and coaches' families without power in a devastated city, it's hard to imagine the fractured thought process that went into either of those boneheaded decisions.
Sports competition at the major-college and professional level requires a high level of concentration. Given the circumstances under which these games were played, it is not surprising in the least that the Houston teams lost each one of them. How could the players and coaches be concentrating on a damn game?
It's only God's grace to both Maggard and Selig that no family member of either a UH or Stros player or coach was hurt or killed in the aftermath of the storm. Why do either of these fellows still have their respective jobs?
September 15, 2008
An estimated 5 million customers along the upper Texas Gulf Coast lost power as a resuit of Hurricane Ike. Only about 5% of those have been restored as I write this post. Current estimates are that it will be 2-3 weeks before even most of those customers will have their power restored.
To give you an idea of the enormity of this damage, the last hurricane to make a direct hit on the Houston metro area -- Hurricane Alicia in 1983 -- left 750,000 customers without power. Two-thirds of those customers had their power restored within five days, and it took between 2-4 weeks to restore the rest.
Although The Woodlands (where my family lives, 30 miles north of downtown Houston) did not suffer catastrophic damage from Ike, the part of the grid from which it receives power did. Entergy, the power company here, estimates that it will be between 2-3 weeks before The Woodlands power is restored. No one in The Woodlands currently has any power (I am writing this from my battery-powered laptop with an air card).
With that backdrop, i was curious to discover this notice from the local public school system:
Conroe Independent School District announced schools will be closed Monday and Tuesday and the Tuesday board meeting is cancelled. Residents are asked to check the Web site or call after 4 p.m. Monday for updates on the rest of the week.
Uh, one question there, school district: how are residents with no power supposed to check a Web site for updates?
Better re-think that approach, folks.
September 14, 2008
My family and I survived Hurricane Ike just fine. Although not an intense hurricane (it came ashore as a category 2), the enormity of the storm was something to behold. In The Woodlands, which is about 30 miles north of downtown Houston, we were buffeted by hurricane and tropical storm winds and torrential rain for over 12 hours. Such a lengthy period of high winds and heavy rain is extremely unusual for even a strong hurricane.
The damage in The Woodlands is not as bad as most of the rest of the Houston area -- mostly just downed trees, some of which damaged houses. However, as many of you outside of the Houston area have seen on television (virtually no one in the Houston area has power, so no television here), the devastation around the Houston area -- particularly those areas close to the coast -- is devastating. My sense is that at least a quarter million people in the metro area do not have a livable home to return to.
Almost every area of Houston has no power. Cell phone networks are overloaded, so cell phone access via either telephone or computer is spotty, at best. No one has a clue of when power will be restored, but the initial estimates are not particularly encouraging.
Inasmuch as I have quite a few arrangements to make over the next several days for my family members and clients, blogging will probably be light or non-existent until some sense of normalcy returns. I very much appreciate everyone who has emailed and phoned to check in on me today. Please understand if it takes awhile for me to get back to you.
Houstonians reacted remarkably in the face of the devastation of Hurricane Katrina back in 2005. Now, it is time for a re-run of that effort. For all of you around country and the world who check in from time to time on this little corner of the blogosphere, any help and prayer that you can provide will be much appreciated.
September 13, 2008
You probably have heard much over the past couple of days about the Galveston Seawall. It was constructed in the early 20th century after Galveston was destroyed by the storm surge of the Hurricane of 1900. The purpose of the seawall is to protect the east side of Galveston Island from similar storm surges. Here is a picture of the seawall:
As you can see, the ocean usually laps up on the beach 75 yards or so away from the seawall. On most days, the ocean rarely gets close to the seawall, even during high tide.
The picture below shows the seawall on Friday morning as Hurricane Ike was still over 100 miles from Galveston in the Gulf of Mexico:
(picture by David J. Phillip/Associated Press)
As you can see, the storm surge from Ike was beginning to breach the seawall over 12 hours before the eye of Ike was scheduled to make landfall.
Weather analysts estimate the the highest point of the surge will occur around midnight on Friday as the Ike's eye makes landfall just west of the seawall during high tide. By that time, the seawall will be little more than a concrete sandbar under the waters of the Gulf of Mexico that are inundating Galveston.
September 12, 2008
The extreme storm surge of Hurricane Ike is causing a disaster in Galveston, Texas, which is about 50 miles southeast of Houston. The Coast Guard announced earlier today that the authorities believe that Galveston Island will be completely submerged for at least 12 hours.
The Galveston City Manager and Mayor were just interviewed on local television at 3 p.m. They estimated that between 25-40% of Galveston's residents (10-20,000 people) did not heed the mandatory evacuation order and have remained on the now-almost completely flooded island. It is now too late to evacuate the island.
Ball High School and the San Luis high-rise resort facility on Seawall Blvd have been opened as relief centers for Galveston residents who stayed. However, widespread flooding on the island makes getting to the centers risky, to say the least.
It is currently estimated that over 1 million residents of the Houston metropolitan area near the coast evacuated over the past several days. Many of those residents will likely have neither a livable home nor power when they return.
This is looking very, very bad.
Then, on August 27, 2005, many folks discovered this little corner of the blogosphere when this post was one of the first to predict the potential for disaster in New Orleans from an approaching Hurricane Katrina. The extraordinary exodus of Gulf Coast residents to Houston followed, along with the impact of that hurricane and others on the U.S. oil and gas industry, and -- presto! -- before you could blink, hurricane-related issues had become the subject of over 90 posts on this blog.
A few more hurricane-related posts may be on their way over the next several days as Hurricane Ike bears down on the Houston metropolitan area late today and through the morning tomorrow. Houston has not taken a direct hit from a hurricane since Hurricane Alicia ravaged the area in 1983 (the eye of that storm went over my house at the time), so many current residents of the city have not experienced a hurricane. That lack of experience, along with the large number of variables that are in play with regard to any hurricane, leads inevitably to some very poor decision-making.
The reality is that the best course of action for the vast majority of Houstonians is to stay put and ride out a storm of the size and intensity of Hurricane Ike (probably a category 2, maybe a 3). Most of the Houston area is different from New Orleans in that it is farther from the coast and of higher elevation so that the threat of flooding is not as big an issue. Thus, outside of the areas of Houston that are close to the coast and are subject to flooding from the storm surge (primarily Galveston Island, the coastal area of Brazoria County and the areas adjacent to the Houston Ship Channel and Galveston Bay), Houston is mainly subject to damage from the wind during hurricanes.
Although hurricane-force winds over a prolonged period are certainly disconcerting, most reasonably-well constructed houses will endure those winds just fine without much damage. Yes, power may be lost for awhile (some parts of Houston were without power for over a month after Alicia) and there is always the risk of tornadoes cropping up as the hurricane passes through. But staying put allows homeowners to take immediate action to mitigate damage to their homes if damage occurs and avoids the not insubstantial risk of injury involved in getting on the road with hundreds of thousands of mandatory evacuees making their way through Houston to a place where they can ride out the storm.
One thing that everyone should do regardless of whether they stay or evacuate is to make sure that, before the storm hits, all loose items on the outside of the house are secured or placed in a secure location inside the garage or house. In hurricane-force winds, those loose items can become projectiles that can break windows and cause other property damage. That -- along with downed trees -- is among the most common cause of property damage and injury during hurricanes outside the areas that are subject to coastal flooding.
As noted earlier here, the best information source for hurricanes these days is the Web and the blogosphere. Most of the local TV weather analysts are quite good (I prefer Frank Billingsley at KPRC), although the local television and radio coverage overall is often atrocious. The anchor people and news reporters often do not have enough to talk about and, thus, end up saying and doing absurd things just to generate attention. It is rather entertaining watching some of these folks make fools of themselves.
By the way, speaking of poor decisions, what on earth is the University of Houston doing playing Air Force in Dallas on Saturday afternoon (they were scheduled to play Saturday afternoon on the UH campus)? Not only is it irresponsible for UH officials to suggest that students and other supporters of the program clog one of the main evacuation routes out of Houston to attend the game, the game itself is likely to be played in driving rain and tropical storm-force winds as Ike passes through the Dallas area on Saturday afternoon. I know this is Texas and all, but Is it really that important to play a non-conference football game?
As long as I have access to power, I will be providing Twitter updates from the north suburban side of Houston during the storm. So, feel free to follow my updates by clicking on the hyperlink on the right side of this page.
September 7, 2008
August 31, 2008
Hurricane Gustav is another powerful hurricane bearing down on the Gulf Coast, so I wanted to recommend Chron science reporter Eric Berger's SciGuy blog as the best source of hurricane information for the Gulf Coast region.
Eric and I got to know each other over the fateful weekend of August 27-28, 2005 when we each posted one of the first blog posts in the blogosphere noting the dreaded turn of Hurricane Katrina toward New Orleans during the early morning hours of Saturday, August 27. Although we both recommended that New Orleans residents seriously consider immediate evacuation, local governmental officials in New Orleans did not do so until much later. We now know the result of that misjudgment. With that disaster in mind, at least I doubt that such misjudgments will be a problem this go-around, as New Orleans lawyer Ernie Svenson explains.
Since that time, Eric has developed his blog into the go-to source in the blogosphere for information on hurricanes in the Gulf of Mexico. Bookmark it and check it regularly for updates on Gustav.
At this time, it looks as if Gustav will make landfall along the Louisiana coast just west of the New Orleans metropolitan area (check out this cool WSJ map that compares the projected path of Gustav with those of the deadly 2005 storms, Katrina and Rita, and this slick new MSNBC hurricane tracker). That track would put much of New Orleans in the storm's northeastern quandrant, which is the most damaging part of the storm.
If that path holds, then post-landfall rainfall next week will be the main problem for the Houston area. The storm is expected to slow down somewhat after making landfall and become a tropical storm or depression in northwestern Louisiana and then northeastern Texas. The Dallas-Ft. Worth Metroplex has been in the throes of a drought for the past several months (as was Houston until the past couple of weeks or so), but that should end next week if Gustav continues its current course.
January 8, 2008
This Dr. Susan Okie/New England Journal of Medicine article (H/T Kolahun) provides the most extensive analysis to date of the circumstances surrounding the tragic deaths of the nine New Orleans area hospital patients during the aftermath of Hurricane Katrina that led to the egregious prosecutorial decision to bring criminal charges against one of the treating physicians, former University of Texas Medical School physician, Dr. Anna Pou (previous posts here). Dr. Okie addresses the key question of why these nine patients died ". . . in light of the eventual evacuation of about 200 patients from [the hospital], including patients from the intensive care unit, premature infants, critically ill patients who required dialysis, patients with DNR orders, and two 400-lb men who could not walk." It's an important question to address, but not in the context of a criminal case.
The fog of war analogy is certainly appropriate. Even with as good information as we have about the horrific conditions at the hospital in the aftermath of Katrina, it's still hard to imagine how difficult it was making even basic decisions in the face of the breakdown of civil society and infrastructure. What we do know is that Dr. Pou, who was not experienced in providing emergency medical services in what amounted to a heavy combat war zone, was no ethicist on mission to make a political statement. Rather, she was simply a physician doing the best she could to make the right decisions under the worst circumstances imaginable. It should not surprise us if, with the benefit of hindsight bias, some of those decisions would not have been the ones that a reasonable physician would have made under better conditions.
November 20, 2007
I've been meaning to pass along this James Q. Wilson/WSJ ($) op-ed that lucidly describes the crisis that has developed in property insurance markets along the Gulf Coast as a result of the litigation risk and attendant cost of clearly inapplicable claims being asserted against property insurance policies:
When Hurricane Katrina hit our southern coast, it was the worst natural disaster in American history, killing 1,800 people, forcing more than a million to evacuate the area, and putting four-fifths of New Orleans under water. In the struggle to recover from this event, people turned to their insurance companies for help. Thousands of claims were handled, but for some people there wasn't any coverage. The problem was they were not insured against flooding.
Insurance companies' policies are quite clear on this, and state insurance departments, including the ones in Mississippi and New Orleans, have approved these rules. The homeowners' policy issued by State Farm, for example, says that water damage from a flood, waves, tidal waves, or a tsunami are not covered. . . .
The reason for the exclusion of water damage is quite clear: Hardly any insurance company wants to encourage people to build or occupy structures in places where such damage is likely. If they did allow this, either the company would go bankrupt from losses it could not pay or it would have to charge a premium so high that hardly anyone could afford the insurance. Even without water-damage coverage, insurance companies paid out around $40 billion to Katrina victims. [. . .]
Not content with these policies and rules, trial lawyers and politicians in Mississippi demanded that insurance companies should be required to pay for flood losses even though they were not covered by the policies. Richard "Dickie" Scruggs, a veteran of class-action suits, and Mississippi Attorney General Jim Hood worked together to create a lawsuit that would retrospectively ban the flood exclusion rule. (Mr. Scruggs was a major source of campaign money for Attorney General Hood.) At the same time, Rep. Gene Taylor from Mississippi urged Congress to require a retroactive payment of flood insurance. Never mind what the homeowners' insurance policies said or what their coverage was, demanding money to which they were not entitled became "good public policy." [. . .]
In time some measure of sanity was restored. A federal district court judge upheld the flood exclusion in insurance policies, a view that was affirmed by the Court of Appeals for the Fifth Circuit. More recently, the Fifth Circuit has affirmed that there is no coverage when an excluded peril (such as flooding) and a covered one (such as windstorms) both contribute to the same damage. A Louisiana state judge agreed that policies not written to provide flood insurance did not, in fact, provide it. . . .
But the return of sanity was of short duration. In June Mr. Scruggs filed a lawsuit against State Farm saying that it engaged in racketeering, and Attorney General Hood filed a new civil lawsuit -- and then followed up with another grand jury investigation contrary to his prior agreement with State Farm. One wonders how its claims adjusters feel when they are told that they are no better than members of the Mafia.
In light of all this, State Farm announced earlier this year that it would no longer sell new homeowners' policies in Mississippi, not to punish people there but because politicians had made it impossible to do business in an orderly way. In response, Attorney General Hood demanded that the governor order State Farm to write new policies. Gov. Haley Barbour replied, quite reasonably, that he does not have the authority to tell a private company that it must do business in his state. There will no doubt be congressional investigations of the insurance business because it did what it told people it was doing.
And Hood calls himself a public "servant" (see earlier post here)?
August 31, 2007
The "News-Hurricane" category of this blog began with Hurricane Katrina in 2005. The second post in that blog was this one in the early afternoon of Saturday, August 27, 2005, which was one of the first in the blogosphere warning of Katrina's potential danger to the New Orleans area and urging citizens to evacuate immediately. Unfortunately, most of the folks who stayed and lost their lives in Katrina probably had no way to read the recommendation passed along in the final sentence of that post.
Over the past two years, the "News-Hurricanes" category has developed into a cross-section of articles and blog posts on the various legal, economic and political issues involved in the rebuilding of New Orleans. On the two year anniversary of the storm, here are several more good ones:
Reason Magazine's Daniel Rothschild has traveled to New Orleans twenty times over the past two years reporting on the reconstruction. Here is the first installment of a three part series that is a must-read for anyone interested in the reconstruction of New Orleans;
The NY Times' Adam Nossiter, who has also reported extensively on New Orleans over the past two years, provides this article entitled "Commemorations for a City 2 Years After Storm;"
Moneyball's Michael Lewis writes about the risk of Hurricane Katrina;
Nicole Gelinas of City Journal writes on how the breakdown in law and order continues to hamper the rebuilding of New Orleans;
Ben C. Toledano argues that New Orleans effectively died long before the hurricane struck; and
This Associated Press story describes the difficult task of re-establishing New Orleans' small businesses, which were a major source of job loss after Katrina (a point made at the time). One of the most interesting aspects of the story is one small businessman's view on immigration:"Trying to find workers, that's the toughest thing," [small businessman Robert] Thompson recalled. "The people we dealt with — craftsmen, carpenters, electricians, roofers — weren't home and if they were, they were decimated themselves."
Help did come in the first few weeks and months, in the form of workers from Honduras and Mexico who arrived in New Orleans to work in the rebuilding.
"Thank God for them, they were the work force for many, many months," Thompson said.
August 27, 2007
Dr. Anna Pou (previous posts here), the former faculty member of the University of Texas Medical Branch in Galveston, performed heroically in the horrific aftermath of Hurricane Katrina. For her heroism, she became the main subject of one of the most egregious examples of prosecutorial misconduct in recent memory. In this extensive Newsweek article, Dr. Pou finally tells her side of the story and it magnifies the enormity of the injustice that a few irresponsible Louisiana state officials have put her through. The following are a few tidbits:
What was it like after the levees broke?
Monday after the storm passed, we figured, ‘OK, minimal damage; we began organizing how we were going to evacuate the hospital.’ We didn’t have full power so we needed to move patients. Tuesday morning we were planning our day and one of the nurses called me to the window and said you’ve got to come see this. Water was gushing from the street. So we all kind of looked in disbelief. What is this? We could tell the city was flooding, you could see water down Claiborne Street. It was rising about a foot an hour. Then the whole mood at the hospital changed and what we were doing changed. We were in hurricane mode and we had to go into survival mode because we knew we had to be there for some time.
How did things change on Wednesday?
Tuesday night, we lost generator power, and that changed things a lot. ‘Til then we were on generator power so we did have some lights, and we did have some water. Water wasn’t clean, but it was running. But then we didn’t have water, we didn’t have any electricity, commodes were backing up everywhere. Conditions in the hospital started to deteriorate Tuesday night and early Wednesday. When that happens it makes care a lot more difficult. I was called to help suction a patient who had a tracheotomy but we had no suction running. We were going down to very, very basic care. You try every old-time method you can … [P]eople in charge were trying to get helicopters to come, [but] at that time we were told we were low priority. There were people on rooftops [who were going to get rescued first]. They said … there’s not going to be a lot of help coming, [so] what we decided [was] if helicopters were going to show up sporadically, we have to have patients ready and waiting to go. [. . .]
The conditions were unbearable. Inside the hospital it was pitch black, with odors, smell, human waste everywhere. It was very rancid. You would take a breath in and it would burn the back of your throat. The patients were very sick. That’s when we had to go from triage to reverse triage because we came to realize if patients aren’t being evacuated, [we had to deal with what we had]. Basically it was a general consensus that we’re not going to be able to save everybody. We hope that we can, but we realize everybody may not make it out. [. . .]
By the time Wednesday evening came around, if you can imagine in our mind, there is a central area that is a sea of people. A lot of very sick patients in that central triage area. It’s grossly backed up. Few patients had been evacuated. So there was just enough space to walk between the stretchers. It is extremely dark. We’re having to care for patients by flashlight. There were patients that were moaning, patients that are crying. We’re trying to cool them off. We had some dirty water we could use, some ice. We were sponging them down, giving them sips of bottled water, those who could drink. The heat was—there is no way to describe that heat. I was in it and I can’t believe how hot it was. There are people fanning patients with cardboard, nurses everywhere, a few doctors and wall-to-wall patients. Patients are so frightened and we’re saying prayers with them. We kind of looked around at each other and said, “You know there’s not a whole lot we can really do for those people.” We’re waiting [for help]. The people in that area could have [been evacuated] by boat but no boats were coming. I would do what I could with the nurses: changing diapers, cooling patients down with fanning. It wasn’t like, “I’m a doctor, you’re a nurse.” We were all human beings trying to help another human being, whatever it took.
What happened Thursday?
On Thursday morning we were told nobody was coming and we had to fend for ourselves. Everybody was kind of like at a loss here. What is plan B? Or plan C?
How did you come to be the one administering the injections? Louisiana Attorney General Charles Foti made a point of saying you had administered medication to people who were not your patients.
This was an emergency situation. There were no LifeCare doctors. In an emergency situation, the patients become everybody’s patients. What are you supposed to do if a patient needs to be cleaned and have IV fluids, say, “You’re not my patient, good luck”? That’s absurd. If that’s the case I dare say three-fourths of the population of Memorial Hospital would have been left without a doctor. We’re in medicine because we care about people. This is what we do. We don’t run around murdering people. That’s why what he said is so ludicrous.
When did you leave the hospital and who was still there when you left?
I left Thursday around 6 p.m. in a helicopter. When I left no one was in the hospital. There were a handful of patients on the helipad. I went to [another hospital and then] on a bus to Baton Rouge because my family was there.
How did you feel?
I was tired but I was more in total disbelief that the sick and the poor could be abandoned the way that they were in the United States of America. I never thought I would ever live to see that day. I was sad, heartbroken, kind of amazed and shocked at the lack of organization—the fact that there was no type of coordination. I have friends who practice in the third world and this was less than third world.
What was it like to be arrested in 2006?
I had [performed] surgery that Monday. It was bedlam in the medical community after Katrina. I had surgery Monday, Tuesday, Wednesday, Thursday and clinic on Friday. And the attorney general’s office knew that. I was taking care of indigent patients. He put my patients at risk. I am still angry about that. And then I was basically sitting by myself eating a salad, still in scrubs. I was starving and really dehydrated because I had been on call the weekend and been up 48 hours before. There was a knock on the door. It was four agents from the attorney general’s office.
The whole way [to jail] I was asking God to help my family get through this. I have nieces and nephews, and my hospitalized patients, who found out about this on the 10 o’clock news, which was heinous. Had I known [about the arrest], I could have spoken to my patients. Instead I just don’t show up and they see me on the news. There were cancer surgeries that had to be rescheduled. These patients’ treatments were delayed because of what happened. I am still furious about it. It just really makes me mad.
There is much more, so read the entire article. Again, I ask -- where is the investigation of the public officials who are responsible for attempting to organize this lynch mob against this hero?
August 20, 2007
According to this NY Times article, apparently not much:
After two years and more than a billion dollars spent by the Army Corps of Engineers to rebuild New Orleans’s hurricane protection system, that is how much the water level is likely to be reduced if a big 1-in-100 flood hits Leah Pratcher’s Gentilly neighborhood.
Looking over the maps that showed other possible water levels around the city, Ms. Pratcher grew increasingly furious. Her house got four feet of water after Hurricane Katrina, and still stands to get almost as much from a 1-in-100 flood. [ . . .]
New Orleans was swamped by Hurricane Katrina; now it is awash in data, studied obsessively in homes all over town. And the simple message conveyed by that data is that while parts of the city are substantially safer, others have changed little. New Orleans remains a very risky place to live.
The entire flood system still provides much less protection than New Orleans needs, and the pre-Katrina patchwork of levees, floodwalls and gates that a Corps of Engineers investigation called “a system in name only” is still just that.
The corps has strengthened miles of floodwalls, but not always in places where people live. It has built up breached walls on the east side of one major canal, but left the west side, which stood up to Hurricane Katrina, lower and thus more vulnerable. It has not closed the canals that have often been described as funnels for floodwaters into the city. [. . .]
As a result, the city still lacks a system that can stand up to that 1-in-100 storm, let alone one like Hurricane Katrina, which the corps calls a 1-in-396 storm. The work that could build the more robust system — originally estimated at $7 billion, and now at least twice that — will not be completed until 2011 at the earliest, and experts agree that even that level of protection will be less than the city needs.
The corps is working on a two-year, $20 million study to find ways of providing even more protection, but it will not even be released until December.
Read the entire article. As noted in many posts over the past two years in the hurricane category of this blog, the performance of the various federal, state and local governmental entities in rebuilding New Orleans has been generally abysmal, at best.
July 23, 2007
The state's threat to prosecute Dr. Anna M. Pou for murder is a sad reflection of the incompetence in the Louisiana state government that permeated the preparations for and the aftermath of Hurricane Katrina. After almost two years now of legal limbo, Dr. Pou's defense team is fighting back:
Dr. Anna Pou - the physician arrested in the deaths of four patients at a New Orleans hospital after Hurricane Katrina - filed suit against the Louisiana Attorney General on Monday, accusing him of using her arrest to fuel his re-election bid.
The suit, filed in state court in Baton Rouge, also seeks to force the state to provide a legal defense for Pou against civil lawsuits filed by families of three of the patients.
Last year, State Attorney General Charles Foti claimed Pou and two nurses killed four people with a ‘‘lethal cocktail'' at Memorial Medical Center during the chaotic conditions after the August 2005 storm. The four were among at least 34 who died at the sweltering, flooded hospital in the days following Katrina. Pou, who is free on bond, has not been formally charged. A New Orleans grand jury is looking into the case.
Foti had Pou arrested, ‘‘called an international press conference the next day to announce the arrest, made extra judicial comments totally contrary to the Rules of Professional Responsibility, and culminated the week's activity with an attorney general fund raiser to showcase his ‘achievements' in the arrest of Dr. Pou and the two nurses,'' the suit says.
Foti was not immediately available for comment . . .
Go Dr. Pou!
July 15, 2007
In the summer of 2005, tens of thousands of citizens from the New Orleans area relocated to Houston and other cities in the aftermath of Hurricane Katrina, most of whom never returned to their former home. A substantial number of those evacuees were poor and largely unemployed in the depressed New Orleans-area economy that existed even prior to the destruction of Katrina. Thus, the hope was that those evacuees would be able to improve their living standard by starting anew in economically vibrant areas such as Houston.
Unfortunately, that has not been the case. As this Jacob Vigdor post notes, research on the Katrina evacuees is indicating that the syndrome of poverty is extremely difficult to change:
Should governments help residents of depressed regions move towards more prosperous areas? Evidence from Katrina evacuees suggests that such efforts are likely to fail. The fortunes of long-term evacuees are almost completely unrelated to the characteristics of the cities to which they relocated. [. . .]
What can the world learn from the experiences of Hurricane Katrina evacuees? As indicated in other recent research carefully examining the impact of residential location on employment, moving a poor, undereducated citizen from a declining urban area to the middle of a vibrant economy is not likely to be a quick, cheap way to find him or her a job. While participants in a voluntary relocation programme would almost certainly be exposed to less personal trauma than Katrina evacuees, the survival instinct alone appears to be insufficient to guarantee success. Particularly in nations with social welfare systems more generous than the American model, the result of any such programme seems quite likely to increase, rather than assuage, drains on the public budget in the short-to-intermediate term.
June 11, 2007
It's hurricane season in the Gulf Coast region, which always generates some interesting issues involving insurance markets and liability (see also here). Along those lines, this Tim Haab post discusses an interesting case arising from the floods of Hurricane Katrina regarding the difference between an Act of God and an act of man under a homeowner's insurance policy. A good reminder to pull out your homeowner's policy and review what type of damage is covered and what's not in the event of a hurricane.
March 12, 2007
In a hurricane-ravaged city desperately lacking health services for the poor, the primary-care clinics that arrived in New Orleans last summer looked to be just what the doctor ordered.
The six double-wide trailers from FEMA, each equipped with eight exam rooms, were supposed to be strategically deployed around the city and provide checkups and other nonemergency health services for the city's poor and uninsured.
But nearly nine months after they were first delivered, the trailers are still in the parking lot of University Hospital waiting to be deployed, and Louisiana State University officials are angrily asking how the seemingly simple process of bringing them into service got delayed by red tape and political foot-dragging. [. . .]
LSU hospital officials began planning for a temporary network of neighborhood clinics in early November 2005, barely two months after Hurricane Katrina knocked Charity Hospital out of commission and threw health-care services for many of the city's uninsured into disarray.
Eight months later, in late June and early July, FEMA delivered the trailers to New Orleans, with the $761,000 bill picked up by the federal government.
It wasn't until last week that the New Orleans City Council agreed to temporarily waive the city's zoning code to allow the trailers to be located at six schools around the city -- three on the east bank and three in Algiers -- for two years.
In between fell more than 100 meetings and dozens of e-mails about the issue involving LSU executives and officials at the city, state and federal levels. And the journey is not over. The zoning waivers still need approval from Mayor Ray Nagin, which cannot occur until next week at the earliest, as well as permits from the city that could take up to six months to acquire.
Donald Smithburg, who heads LSU's hospitals division, said university officials have stood ready to operate the clinics -- each of which require one doctor, two nurses and administrative staff -- since last summer, which is when LSU officials first approached the City Council about a zoning change for the clinics.
He said he was flummoxed by the continued delays. "It's been a procedural mystery as to how we get these trailers placed," Smithburg said.
Read the entire sordid tale.
February 5, 2007
Speaking of prosecutorial excess, the case of Dr. Anna Pou -- the former University of Texas Health Science Center professor and physician who was arrested last year in Louisiana on wrongful death charges for her actions in attempting to save lives during the chaotic aftermath of Hurricane Katrina -- was back in the news last week. The New Orleans coronor announced that he had not found evidence that would show that the cases were homicides, although he noted that he was continuing to gather evidence and had reached no final conclusion.
Dr. Pou's case was transferred to Orleans Parish after Louisiana Attorney General Charles Foti had labeled her and two nurses who were assisting her during the chaos as murderers. Just to make sure he got the most publicity possible for his lack of prosecutorial discretion, Foti repeated those charges on 60 Minutes several months ago. Ultimately, the decision on whether to prosecute will come down to Eddie Jordan, the District Attorney of New Orleans, who is still planning on presenting evidence to a grand jury. With the the coroner’s current classification, what on earth is there to present to a grand jury?
January 31, 2007
This Christopher Cooper/Wall Street Journal ($) article on the inability of the federal, state and local governments to administer the vast amounts of aid appropriated to rebuild New Orleans and the Gulf Coast region was published over this past weekend, so the story was not widely discussed around the blogosphere. But the story it tells is instructive regarding the inefficiency of government administration in comparison to entreprenurial activity in achieving the goal of rebuilding the region:
It's been almost 17 months since Hurricane Katrina pounded coastal Mississippi and southeast Louisiana, and about a year since Congress authorized the bulk of its rebuilding aid for the region. More than four months have passed since President Bush visited New Orleans on the anniversary of the storm and extolled the "amazing" reconstruction effort.
But a review of the devastated region shows that rebuilding is in a deep stall. Tens of thousands of residents remain displaced as authorities dither over how to disburse housing assistance. Many crucial infrastructure projects have yet to start. Of the tens of billions appropriated by Congress, half remains unspent.
There are many culprits. Among them: the size of the disaster, which continues to overwhelm agencies charged with rebuilding; the crush of competing bureaucracies, which has delayed many projects including the Bay St. Louis bridge; and weak local leadership.
In addition, many reconstruction efforts are ensnarled in spools of red tape spawned by a bevy of old and new government procedures. A prime example: an obscure set of 30-year-old Congressional rules designed to combat corruption known as the Stafford Act.
According to the White House, the federal government has provided $110 billion for the Gulf Coast region. But nowhere near that amount of actual cash has been made available. The total is spread over five states and covers damage done by three separate storms. Some of it consists of loans. A chunk comes from government insurance payouts that ultimately derived from premiums paid by homeowners themselves.
Of $42 billion given to the Federal Emergency Management Agency, the agency has spent only $25 billion, federal records show. Most of that went to temporary housing, debris removal and emergency operations in the early days of the disaster. It has spent more than $4 billion on administrative costs.
Louisiana says the Army Corps of Engineers has spent only about $1.3 billion of the $5.8 billion it received to repair the levees in and around New Orleans. Only about $1.7 billion of the $17 billion received by the Department of Housing and Urban Development has made its way to the streets, the agency says.
In New Orleans, officials say they have received only about 14% of the estimated $900 million in reconstruction money they estimate is needed to fix the ruined city. "We have lots of meetings," says Cynthia Sylvain-Lear, the city's liaison with FEMA.
The article notes a particularly stark example of the difference in effectiveness between government adminstration and private enterprise:
In August, 2005, Hurricane Katrina flattened two bridges, one for cars, one for trains, that span the two miles of water separating this city of 8,000 from the town of Pass Christian. Sixteen months later, the automobile bridge remains little more than pilings. The railroad bridge is busy with trains.
The difference: The still-wrecked bridge is owned by the U.S. government. The other is owned by railroad giant CSX Corp. of Jacksonville, Fla. Within weeks of Katrina's landfall, CSX dispatched construction crews to fix the freight line; six months later, the bridge reopened. Even a partial reopening of the road bridge, part of U.S. Highway 90, is at least five months away.
So, the government cannot invest the funds appropriated to rebuild New Orleans and the Gulf Coast region in a prompt manner. But at least fraud in the administration of those funds is under control. My sense is that the residents of New Orleans and the Gulf Coast would be willing to risk a good dose of fraud to achieve some results at this point. Harry Siegel, who has been studying the recovery of New Orleans over at the Manhattan Institute, has more.
January 26, 2007
A week or so ago, this post noted that the local and state governments of Louisiana have to date failed to do what is necessary to jump-start the revitalization of New Orleans.
So, faced with such a record of failure, what does the local government of New Orleans do?
Hire former Houston mayor Lee P. Brown as a consultant.
If you've ever asked yourself, as you've watched the post-Katrina morass of incompetence and violence that has engulfed New Orleans, whether that city has suffered enough, you have your answer. And that answer is "no."
N'awlins, get ready for...the magical world of Lee P. Brown!
Brown, who was Atlanta's public-safety commissioner during a famously inept serial-murder investigation, who was New York's police commissioner during the ineptly handled Crown Heights riots, who was Houston mayor while the HPD crime lab was run...eptly? Guess again!...has been hired to solve New Orleans' massive violent-crime problem.
If his time here is any indication, Brown will implement a two-pronged attack. He will a) bore everyone to death, using content-less, cliché-filled, charisma-free speeches to put criminals into a stupor; and b) take a lot of taxpayer-funded out-of-town trips. We're sure Rome and London need to be studied closely for tips on how to stop Ninth Ward gangbangers.
Brown told the Louisiana Weekly that "there is no silver bullet that is going to say that this is going to be done tomorrow...Working together, you can get the job done."
We're kind of surprised Brown didn't mention making New Orleans "a world-class city," but it's still early.
Connelly goes on to report that even residents of New Orleans are scratching their heads over what Brown is supposed to do.
Meanwhile, the prescription for government to revive New Orleans remains simple -- ensure law and order, provide basic services, create an environment where entreprenuers will take the risk of starting businesses that will create jobs that will attract residents to the area, and then get out of the way. If Brown passes that advice along to Mayor Nagin, then he actually might be worth whatever New Orleans is paying him.
January 17, 2007
Although the Bush Administration's troubles in devising and implementing a workable strategy for bringing civil order to Baghdad receives most of the mainstream's media attention, the failure of government to facilitate order in New Orleans and rebuilding throughout the Hurricane Katrina-ravaged Gulf Coast region is a more appalling failure (earlier post here).
It's not as if my expectations for government in the New Orleans region are all that high -- I'd be satisfied with ensuring law and order, making sure that basic services are provided and creating an environment where entreprenuers will take the risk of starting businesses that will create badly-needed jobs for the residents of the area. In this NY Times article, Adam Nossiter continues his series of excellent series of articles over the past year regarding the failure of the local and state governments in New Orleans to ensure law and order and the devastating effect that failure is having on the region.
Meanwhile, in another not as well-reported failure of government, this NY Times article reports on the Oreck Corporation's decision to move its maufacturing facility and 500 jobs from the Gulf Coast region of Mississippi to Tennessee, in large part because of the company's difficulties in arranging insurance for its operations in Mississippi. As Ted Frank observes, the lack of insurance coverage is the direct result of Mississippi courts expansion of the coverage of insurance contracts beyond their plain terms and the state legislature's response to those court decisions, which "has [made] things worse: criticize the businesses who have left, and seek to further regulate the price of insurance, despite thousands of years of evidence that limiting the price will reduce the amount supplied and lead to shortages."
But at least the region has (for this season anyway) a good professional football team, which continues to exist in New Orleans only because local and state governments in Louisiana found the time and resources to arrange several hundred million in emergency funding for the team and its facilities. And even that subsidy might not work in the long run. As usual, the government has its priorities in order.
By the way, while on the subject of interesting Ted Frank blog posts, don't miss this one.
August 27, 2006
The NY Times continues today with another installment in its excellent The Katrina Year series focusing on the status of the rebuilding of New Orleans. To the surprise of no one who has ever been involved in the interplay of business development nad government bureaucracy, the re-development of areas of the city that are most attractive for investment has actually gone reasonably well, while the areas in which government subsidies are necessary to induce private capital to invest have lagged. Also not surprising is the fact that local governmental entities still have not been able to put together a plan for providing basic governmental services for redevelopment. So it goes.
As noted in posts here and here last year in the immediate aftermath of Hurricane Katrina, one of the biggest problems confronting redevelopment of the New Orleans area was the storm's destruction of small businesses, which on an aggregate basis was the largest provider of jobs in the New Orleans area. This NY Times article reports on the struggles that small businesses in New Orleans have confronted in attempting to stay afloat in the year after Katrina and how many of the pre-Katrina small businesses have little hope of coming back.
Update: In this Opinion Journal editorial, the Wall Street Journal editorial board eviscerates the federal government's handling of the enormous amount of federal aid thrown at New Orleans in the year since Katrina.
August 3, 2006
Last August, the Chronicle's fine science writer, Eric Berger, began his popular SciGuy blog shortly before Hurricane Katrina hammered the central Gulf Coast. On the Saturday morning before Katrina hit, Eric and I were two of the earliest bloggers to recommend that people get out of New Orleans immediately and, in so doing, discovered each other. Since that time, Eric has become my go-to source for science information generally and hurricane information, in particular.
In this Chronicle article and related blog post, Eric predicts that there is a good chance that Tropical Storm Chris will become this season's first Gulf hurricane by early next week (but maybe not, too). As a result, if you haven't done so already, be sure to bookmark Eric's blog and check it regularly -- there is no better local source for hurricane information and analysis. His blog is yet another example of how weblogs have revolutionized the way in which specialized information is disseminated in American society.
July 20, 2006
Dr. Anna Pou, the New Orleans doctor who heroically served severely-ill patients during the chaotic aftermath of Hurricane Katrina last summer, is at the center of the highly-publicized and controversial decision of Louisiana criminal authorities earlier this week to arrest Dr. Pou and two assisting nurses and charge them with second-degree murder in the deaths of four patients who died during that horrible time. She is also a former Houston-area resident, having served on the faculty of the University of Texas Medical Branch in Galveston from 1997-2004, where she was the Director of the Division of Head and Neck Surgery from 1999 to 2004.
Today, this excellent NY Times article places in perspective the arrest and prosecution of this outstanding physician, who is a diplomate of the American Board of Otolaryngology, Fellow of the American College of Surgeons, and a member of the American Head and Neck Society. Dr. Pou has authored more than forty publications, has also served on multiple committees of the American Academy of Otolaryngology, and has lectured in national and international forums on topics in otolaryngology, head and neck oncology, and microvascular reconstructive surgery.
In short, Dr. Pou is no murderer. This prosecution has all the earmarks of yet another lynch mob that is more interested in myths than reality, so watch it closely.
June 27, 2006
Of all the consequences of Hurricane Katrina on the state of Louisiana, this NY Times article reports on one that I never expected:
State officials assumed that Louisiana's tax base had been battered by last year's hurricanes, but the latest figures show that the opposite occurred: more tax dollars than ever are pouring into the state's coffers as the budget year draws to an end.
The state predicted that tax collections would plunge by almost $900 million this year, and it slashed spending to match. Instead, a record $9.2 billion is on track to be collected by the time the budget year ends on June 30, and at least some of that tax flow looks as if it is likely to continue.
Part of the tax revenue boost has come from increased gambling at casinos and video poker machines located in the state, and higher energy prices has also helped increase tax and state royalty revenue. However, the biggest surge has come from sales taxes as hurricane victims have used federal aid and insurance proceeds to replace personal property. State officials estimate that the state will end up with almost a half-billion more in sales tax revenue than they expected before Katrina.
Meanwhile, the hulks of thousands of damaged cars remain under the highway overpasses of New Orleans as state and federal officials quibble over who will finance the cost of towing the scrap to landfills and scrapyards. And this NY Times article follows up on this earlier post regarding the "breathtaking fraud" that took place in regard to the federal aid that has flowed into the Gulf Coast after last summer's storms. So it goes in Louisiana.
June 21, 2006
On the heels of articles noted in earlier posts here and here, the New York Times continues its excellent series on the enormous difficulties involved in the rebuilding of New Orleans with this article that reports on the city's strained public health system, which is attempting to cope with such things as a suicide rate that is three times higher than the pre-Hurricane Katrina rate. The article sums up the dreadful situation:
This is a city where thousands of people are living amid ruins that stretch for miles on end, where the vibrancy of life can be found only along the slivers of land next to the Mississippi. Garbage is piled up, the crime rate has soared, and as of Tuesday the National Guard and the state police were back in the city, patrolling streets that the Police Department has admitted it cannot handle on its own. The reminders of death are everywhere, and the emotional toll is now becoming clear.
Speaking of Hurricane Katrina, the Sun-Herald.com has compiled this extraordinary webpage that contains hundreds of "before and after" photographs of structures and landmarks affected by the storm. It's well worth taking a few minutes to peruse the pictures and contemplate the enormity of the destruction facing the Mississippi-Louisiana Gulf Coast region.
June 20, 2006
On the heels of this report that New Orleans has lost over 60% of its population since Hurricane Katrina last summer, this NY Times article reports that, despite billions of dollars in federal aid that is available, local New Orleans governmental officials cannot even agree on whether a government plan to faciliate the rebuilding of New Orleans is even being prepared, much less when such a plan will be issued.
Then yesterday, after a weekend of grisly violence, New Orleans Mayor C. Ray Nagin admitted that New Orleans police could not control the city's crime problems and requested that the state send National Guard troops to help patrol the streets of New Orleans.
Meanwhile, amidst such dire problems, enormous resources are being expended on the civic largesse of supporting the city's National League Football team.
What a mess.
June 16, 2006
One of the enduring images of the catastrophic damage that last summer's hurricanes inflicted on Gulf Coast oil and gas production facilities was the picture to the left of Royal Dutch Shell PLC's MARS floating production platform (previous posts here and here), which was badly damaged by Hurricane Katrina. As this Washington Post article reports, Shell has finished repairing the huge platform, just in time for this year's hurricane season. The article goes on to provide a handy overview of the importance of the Gulf Coast oil and gas infrastructure for meeting the nation's energy needs and the efforts to bolster the ability of that infrastructure to weather the severe storms of hurricane season.
Despite the massive repairs, the main improvement in the MARS platform to protect it from another severe storm is decidedly low-tech -- stronger and twice as many clamps to hold the drilling rig to the platform. Those clamps work against vertical and horizontal forces and, during Katrina's category 4-5 winds (the storm hit shore as a strong cat 3 storm), three inch steel bolts holding the previous clamps were sheared straight through. Although the old clamps had survived many storms, Shell engineers believe that the new ones will work even better.
June 14, 2006
So, you thought that the Federal Emergency Management Agency's response to the damage from Hurricane Katrina last year left much to be desired? Well, this NY Times article reports that a recent Congressional investigation has determined that the agency's relief effort was stellar in comparison to its fraud management policies:
As much as $1.4 billion in government disaster aid to victims of Hurricanes Katrina and Rita — nearly a quarter of the total — went to bogus or undeserving victims, a new Congressional investigation concludes. [. . .]
The improper or fraudulent payments went to a dizzying array of con artists or other undeserving recipients, according to the analysis by the Government Accountability Office, which is set to announce its findings at a hearing Wednesday.
In one case, a man stayed more than two months on the government tab at a hotel in Hawaii that cost more than $100 a night. At the same time, he was getting $2,358 in government rent assistance, even though he had not been living in the property he claimed was damaged in the storm.
Emergency aid was used to pay for football tickets, the bill at a Hooters in San Antonio, a $200 bottle of Dom Perignon, "Girls Gone Wild" videos, even an all-inclusive weeklong Caribbean vacation, the report says. More than $5 million went to people who had provided cemeteries or post office boxes as the addresses of their damaged property.
FEMA also provided cash or housing assistance to more than 1,000 prison inmates, totaling millions of dollars; one inmate used a post office box to collect $20,000. . .
In another case, 24 payments, totaling $109,708, were sent to a single apartment, where eight people each submitted requests for aid eight times, each time using their own Social Security numbers.
Another person collected 26 payments using 13 different Social Security numbers — a total of $139,000 — even though public records show the individual did not live at any of the addresses reported as damaged. [. . .]
Investigators concluded that fraudulent or improper payments probably ranged from $400 million to $1.4 billion, leading them to settle on $1 billion as their most likely estimate, representing about 16 percent of the distributed aid. [. . .]
Representative Michael McCaul (Rep. Tex.), who is chairman of the House subcommittee that led the inquiry, is not pleased:
"When you have federal and state prisoners applying for the taxpayers' money — while they are in prison — and then the disaster aid, that is a real assault on the American taxpayer," he said. "I don't have any tolerance for that."
June 7, 2006
This NY Times article reports on two recently-published Census Bureau reports that constitute the findings of the bureau's first study on the social, financial and demographic impact of the Hurricanes Katrina and Rita last summer on the Gulf Coast region:
After the twin barrages of Hurricanes Katrina and Rita last year, the City of New Orleans emerged nearly 64 percent smaller, having lost an estimated 278,833 residents, . . . Those who remained in the city were significantly more likely to be white, slightly older and a bit more well-off, . . . The bureau found that while New Orleans lost about two-thirds of its population, adjacent St. Bernard Parish dropped a full 95 percent, falling to just 3,361 residents by Jan. 1. [. . .] The black population of the New Orleans metropolitan area fell to 21 percent from 36 percent, the bureau found.
While the New Orleans area lost population, the Houston metropolitan area emerged with more than 130,000 new residents, many of them hurricane evacuees. Whites made up a slightly smaller percentage of Houston's population — 62.8 percent of the city in January compared with 64.8 percent last July, a month before Hurricane Katrina hit.
In Harris County, which includes Houston, median household income fell to $43,044 from $44,517, while New Orleans area's actually rose, to $43,447 from $39,793.
Interestingly, the reports debunk widespread speculation that the New Orleans evacuees who went to nearby Baton Rouge, where the population grew by nearly 15,000, were disproportionately poor. The evacuees who landed in Baton Rouge ended up being more middle-class, while the poorer evacuees ended up going to more distant cities, such as Houston.
May 31, 2006
With hurricane season officially starting tomorrow, this NY Times article about the research that has been done over the past year into Hurricane Katrina provides some interesting information, including the stages of the storm on the New Orleans metro area:
The first stage of Hurricane Katrina touched Louisiana as it passed south of the city in the Plaquemines Parish town of Buras with winds of more than 125 miles per hour pushing a storm surge. The wind and water overwhelmed the local hurricane defenses: levees built to withstand 13 feet of water were overwhelmed by more than 17 feet of surge, damaging levees and scattering homes and boats across the thinly populated parish like toys.
As the hurricane moved across Lake Borgne to the east, the effect was quite different: the second storm sent strong waves and a surge estimated at 18 feet or more back across the lake to the levees bordering St. Bernard Parish. The long levees there had been designed to handle 13 feet of water. The assault washed over Chalmette and other communities with floodwaters exceeding 14 feet in some areas. A similar pounding took out the southeastern levee of the development known as New Orleans East.
In its third incarnation, the storm sent the water up a funnel formed at the northwest corner of Lake Borgne and into the city's Inner Harbor Navigation Canal, where the water rose and churned with exceptional force, said Hassan Mashriqui, a researcher with the Louisiana State University Hurricane Center. Those waters shattered flood walls in several places and destroyed the city's Lower Ninth Ward.
As the storm pushed into Mississippi, it sent a final surge toward New Orleans across Lake Pontchartrain, north of the city. As the water stacked up against the south shore of the lake, it rose against the walls of the three main drainage canals that run from the center of the city. Though the surge was weaker than the others and the water did not reach the tops of the flood walls, the 17th Street Canal and the London Avenue Canal suffered breaches that caused the lake's waters to spill into the center of the city.
The NY Times article coincides with my reading over this past weekend of Douglas Brinkley's new book on Hurricane Katrina and New Orleans, The Great Deluge : Hurricane Katrina, New Orleans, and the Mississippi Gulf Coast (William Morrow 2006). Brinkley's book provides mounds of information, but is not particularly well-written, as reviewer Wilfred M. McClay notes in this blistering review:
Let me confess that I haven't read all of the writings of Douglas Brinkley. I doubt that anyone -- perhaps not even Mr. Brinkley himself -- has ever done that. He is a veritable ... deluge of literary productivity, with books to his credit on a dizzying array of subjects, ranging from Beat poetry to Jimmy Carter, and from Henry Ford to, most recently, the failed Democratic presidential candidate John Kerry. Indeed, the range of his literary productions is so wide as to seem indiscriminate. But his bestknown writings seem to have three things in common.
First and foremost is their relentless mediocrity. I cannot think of a historian or public intellectual who has managed to make himself so prominent in American public life without having put forward a single memorable idea, a single original analysis, or a single lapidary phrase -- let alone without publishing a book that has had any discernable impact. Mr. Brinkley is, to use Daniel Boorstin's famous words, a historian famous for being well-known.
By the way, on pp. 14-25 of the book, Brinkley notes the Houston Chronicle's fine science writer Eric Berger and his landmark December 2001 Chronicle story in which Eric predicted the dire impact of a storm such as Katrina on the New Orleans metro area. Eric began blogging at the beginning of the hurricane season last year, and he and I crossed paths as we encouraged New Orleans residents to evacuate on that fateful Saturday before Katrina hammered the upper Gulf Coast even as New Orleans Mayor Nagin continued to delay calling for a mandatory evacuation. Eric's blog became one of the "go-to" sources of information during last year's historic hurricane season, and that experience made me a regular reader of his blog and writings. I have not come across a better blog on science matters for laypersons than Eric's.
As with the Chronicle's recent innovative coverage of the Enron-related trials, Eric's blog is another example of the Chronicle's trendsetting initiative -- inspired by the Chronicle's fine technology writer, Dwight Silverman -- in blending traditional news reports with blogging to change the way in which major news events are covered. Houstonians tend to take the local daily for granted from time to time, but we should all appreciate the Chronicle's willingness to embrace this innovation that has dramatically improved the delivery of important information to citizens.
November 19, 2005
The Fifth Circuit Court of Appeals, which relocated temporarily to Houston in the aftermath of Hurricane Katrina (earlier posts here and here), issued this press release yesterday in which it made public its plans for returning to New Orleans next month. The court will begin moving back Dec. 16 and will be closed until Jan. 8, during which time only emergency matters will be handled. The court originally had planned to move to Baton Rouge as an intermediate step before returning to its longtime home in New Orleans' John Minor Wisdom Court of Appeals Building. However, conditions in New Orleans are stable enough to allow the 135 employees of the Court to return home. The Court has been using makeshift work spaces in the Bob Casey U.S. Courthouse in downtown Houston over the past couple of months.
November 11, 2005
Two and a half months after Hurricane Katrina and the resulting flood hammered New Orleans, this NY Times article notes that the rebuilding of the city is being hampered by a scarcity of labor, a condition that was noted in this earlier post.
Given the massive exodus of people from New Orleans and the relunctance of many former residents to return, my sense is that we are experiencing uncharted waters with regard to the rebuilding of New Orleans. The tremendous loss of jobs almost overnight -- particularly from small businesses that were destroyed by the damage from the flood -- is unprecedented in the modern United States for an area this large. Inasmuch as most of the jobs that are arising as a result of the reconstruction effort are of a different nature from the ones that were lost, many of the people who left New Orleans are not attracted to return by those new jobs. Consequently, my sense is that the key to real rebirth in the area is the re-creation of small businesses, which is a tricky and slow task.
October 26, 2005
Given what I endured last night, I'm in the mood for some disaster news.
As noted in this earlier post, BP Global had been going through a difficult stretch earlier this year when Hurricane Dennis (remember that one?) apparently caused the near total collapse of its huge $1 billion Thunder Horse Drilling Platform in the Gulf of Mexico.
Well, never mind about that hurricane excuse.
BP has announced that the collapse was the result of "human error" rather than damage from the hurricane:
"After a thorough investigation, we have concluded that it was not storm-related, but was caused by a design weakness in the ballast system," Lord Browne of Madingley, BP's chief executive, said.
Translation: "Attention insurers! Grab your wallets!"
October 25, 2005
As predicted earlier here, reports are now confirming that Hurricane Wilma devastated the Cancun and Cozumel hotels and shopping areas that are at the heart of Mexico's tourism industry. Hotels in the area will not open for the Christmas season because of the extensive damage, and early indications are that the area will not be in a position to take on large numbers of tourists until at least Easter weekend in 2006. Marriott International Inc. closed its three resorts in Cancun until at least the end of December and the Ritz-Carlton Cancun said it was closing and not taking reservations until the New Year. The two Hyatt Regency hotels will also be closed for at least a month. Hotel damage in Quintana Roo state -- where both Cancun and Cozumel are located -- is currently estimated at $1.5 billion.
October 24, 2005
The damage from Hurricane Katrina to the Gulf of Mexico's oil and gas production facilities has had a huge impact on national and international oil and gas markets over the past two months. However, from a regional standpoint, the biggest economic impact from Katrina has been the loss of thousands of jobs, particularly in small businesses. A couple of recent articles reporting on the latest governmental statistics and reports from lending institutions provide a clearer picture of the extent of the economic carnage.
Two NY Times articles (here and here) from last week report on the extraordinary job losses in the Gulf Coast region resulting from the hurricane and the effect that such job loss is having on cities and financial institutions in the region. Louisiana and Mississippi lost a combined total of 310,000 jobs in September, which raised their unemployment rates to a United States high of 11.5% and 9.6% respectively. These are staggering job losses for the region, and since most the losses are attributable to small businesses that were either uninsured or underinsured in regard to damage from the hurricane, the restoration of those jobs will be a painfully slow process.
Meanwhile, the double whammy of Hurricanes Katrina and Rita are expected to result in at least $1.3 billion in bad loans for major financial institutions in the Gulf Coast region battered by the storms. While most of the damage came from probably uncollectible loans to now-defunct businesses and consumers who lost their jobs as a result of the storms, the banks also lost substantial revenue from fees and interest that were waived to ease the financial pressure on storm victims.
Hibernia Corp. was the hardest hit as it reported a third-quarter loss of $58.1 million (37 cents a share) compared with year-earlier profit of $76.5 million. Hibernia reported that the two storms cost it almost $200 million in the latest quarter, including a charge of $175 million to boost loan loss reserve. Hibernia also suffered another $35 million in property damage, a quarter of which was uninsured. Similarly, Citigroup Inc., which is the largest U.S. bank by stock-market capitalization, had $3.6 billion in loans in the Gulf Coast region and the bank announced last week that it expects $375 million of those loans -- mostly consumer credit -- not to be repaid.
New Orleans and the Gulf Coast region will slowly regain a portion of its lost jobs over the next 6-12 months as the region's tourist business rebounds with the repair of convention and casino facilities. However, my sense is that a substantial portion of the jobs lost in the New Orleans area are gone forever. As a result, New Orleans business officials need to be concerned much more with promoting policies that will encourage job growth in their city than worrying about costly and unproductive (at least from a jobs standpoint) frivolities.
October 22, 2005
Hurricane Wilma came ashore yesterday afternoon directly on the popular Mexican resort communities of Cozumel and Cancun as a devastating category 4 storm. Although damage reports are still skimpy because of poor communications to the area, there is high probability that both of these communities and the surrounding area will suffer catastrophic damage that in some cases will take years to rebuild. Suffice it to say that this area will not likely be in a position to accomodate tourists for an extended period of time. Jeff Masters puts the situation in perspective:
Wilma's landfall will bring enormous devastation to the 40 to 70 mile wide section of coast exposed to the intense winds of the hurricane's eyewall. A long period of calm lasting up to seven hours will accompany the passage of the slow-moving eye. During the next two days, Wilma will move very slowly over or just offshore the Yucatan. This will expose structures in the hurricane zone to very long duration hurricane force winds, likely making Wilma Mexico's most expensive hurricane disaster ever. Wilma's rains will add to the misery, reaching 20 inches or more over not just the Yucatan, but the western tip of Cuba as well.
Although the current track of the storm into Florida on Monday is still unclear, the current predictions are that it will not be a major hurricane (cat 3 or above) by the time that it makes landfall in Florida. That's good news for Florida and the U.S., but not much consolation for our friends in Mexico.
October 20, 2005
Hurricane Wilma moved toward Mexico's popular Cancun resort Wednesday as an extremely dangerous category 4 storm that has already become the most intense hurricane to form in the Americas since such storms began being recorded over a century ago. The National Hurricane Center in Miami warned that Wilma would be a significant threat to Florida by the weekend and could hit the western coast of Florida as at least a category 3 storm. About the only good thing about the storm's projected path is that it is far enough south at this point that it would probably not cause much additional damage to the Katrina and Rita-ravaged Gulf of Mexico oil and gas production facilities.
Wilma is on on a curving course that will likely go through through the narrow channel between Cuba and Mexico's Yucatan Peninsula on Friday, then on a northeast track toward Florida. Wilma's confirmed pressure readings early Wednesday dropped to 882 millibars, which is the lowest minimum pressure ever measured in a hurricane in the Atlantic/Gulf region (lower pressure = stronger storm). The strongest Atlantic storm on record had been 1988's Hurricane Gilbert, which registered 888 millibars.
For you hurricane junkies, that means that Wilma is stronger than Hurricanes Andrew and Katrina ever were, and is comparable to Hurricanes Rita and Allen at their peak intensities. Including Katrina and Rita earlier this hurricane season, we have now experienced the 1st, 4th, and 6th strongest hurricanes ever recorded in the Atlantic/Gulf region. Wilma is the record-tying 12th hurricane of the season -- equaling the same number from the 1969 season -- and it is the Atlantic hurricane season's 21st named storm, which ties the record from 1933 and exhausts the list of hurricane names for this year. If there is another one, then it would be named after letters from the Greek alphabet, starting with Alpha.
As noted while covering Katrina and Rita earlier this year, my favorite sites for keeping up with hurricanes are the following:
Although there is a good chance that Wilma will weaken as it experiences wind shear and cooler Gulf waters during its approach to Florida, stay tuned. There remains a good chance that it will hit Florida as at least a cat 3 storm, which could make it the worst storm ever to hit the U.S. mainland during the month of October.
October 10, 2005
Edmund Phelps is the McVickar Professor of Political Economy at Columbia University. In this Wall Street Journal ($) op-ed, Professor Phelps makes the remarkably simple but adroit insight that much of the political debate over the rebuilding of New Orleans from the damage of Hurricane Katrina is missing the true problem that bedeviled New Orleans:
The nation is still reflecting on the sight of New Orleans unprotected from Katrina and too feeble from poverty to run from it. Yet some basic issues have scarcely been debated.
So far, the focus has been on what to do about lost and damaged infrastructure. For our legislators and the public, that has raised fascinating questions of political philosophy. The federal government does not pay to defend New York state against Lyme disease or New York City against terrorist attack. So it is a question why it is a federal duty to pay for measures to protect or repair New Orleans from local storms.
The economist's answer is that a disrupted New Orleans has external costs on the farmers upriver and the producers everywhere who depend heavily on the city's great port to ship grain. At likely levels, New York's Lyme disease does not threaten the rest of the nation. Protecting Wall Street ranks high on that external cost test, but not high enough in the estimation of Congress. It is a matter of degree.
And then, Professor Phelps bores in on the real issue:
The talk about rebuilding, however, misses the meaning that most viewers found in the scenes from New Orleans. The impact lay in the helplessness of a large segment of the population -- helpless not because of infirmities for the most part, but because their earning power or their very employability was so meager that they lacked a car with which to get out of the city, or did not have the cash for weeks away from home. The scenes thus made vivid the failure of the American economy to offer work and pay to the less advantaged that would provide them with economic independence and with access to something like the sorts of lives and jobs found in the rest of society. Whatever scale and scope rebuilding takes, it will not raise pay rates of the working poor above pre-storm levels.
Professor Phelps goes on to explain how a regional approach to the problem of New Orleans' poverty is illusory and will not work, and that a well-designed national approach is necessary to address the underlying problem. Moreover, he explains that federal handouts are actually counterproductive to the true goal of eradicating poverty in New Orleans. He concludes with the following commen sense advice:
The events in New Orleans pointed to the tragic flaw of a great nation still in denial about impoverished workers among its own citizens and in a muddle about its causes and cures. There is emerging a sense that it would be good to solve this problem. What is needed now is an understanding of the policy innovations that would be constructive and those that would not.
Definite clear thinking. Check out the entire piece.
And while your thinking about New Orleans, take awhile to read this insightful and personal Micheal Lewis NY Times Sunday Magazine op-ed on his experience in New Orleans immediately after the hurricane, which includes gem-quality observations such as the following:
But my parents have lived their entire adult lives fighting an unwinnable war. In their lifetimes, New Orleans has gone from the leading city of the South to a theme park for low-rollers and sinners. All the unpleasant facts about a city that can be measured - crime, poverty and illiteracy rates, the strange forms of governmental malfunction - have remained high. The public schools are a hopeless problem, and the public housing is a source of endless misery. A disturbing number of my parents' white neighbors have fled to white towns on the far side of Lake Pontchartrain. My parents would never put it this way, but they are fatalists; they have come to view change as unfortunate and inevitable. That's one difference between stability and stagnation. A stable society has the ability to reject or adapt to change. A stagnant one has change imposed on it, unpleasantly. The only question is from what direction it will come.
September 30, 2005
Following on this post from yesterday, the markets continued to react to more information that indicates that damage to Gulf of Mexico offshore production and drilling facilities from the recent hurricanes is going to reduce production and exploration from that key region for an extended period of time.
That information, combined with the slow process of restarting Gulf Coast refineries, is generating one of the more unusual political ironies that America has seen in some time. As a result of the restricted energy supplies from the Gulf region, the outspokenly pro-exploration and production Bush Administration is sounding eerily like the Carter Administration from the late 1970's, promising a national energy-conservation campaign to give Americans tips on saving energy during the winter heating season.
Actually, markets are still trying to adjust to the news of the restricted supplies. Gasoline and heating-oil futures settled lower on the New York Mercantile Exchange yesterday, but front-month crude oil contracts posted a 44 cent rise to $66.79 a barrel -- its highest level in over a week -- although forward month oil contracts were lower. After increasing almost 8% during Wednesday trading, October gasoline settled down about 4% to $2.2516 a gallon and October heating oil fell 1.64 cents to $2.1247 a gallon. November natural-gas futures continued their relentless increast as they rose 9.6 cents to $14.196 per million British thermal units.
The double whammy of Hurricanes Katrina and Rita has not only damaged the Gulf's production and drilling infrastructure, it has damaged the important service industry that provides key logistics support for the offshore exploration and production industry. Helicopters at this point are in such demand that they are nearly impossible to find and many Louisiana dock facilities that used to launch supply boats to the Gulf have been destroyed. Service companies are even having a difficult time finding enough employees to meet the demand for assessment and repair service. This lack fo workers, helicopters and equipment is hampering the damage assessment process with regard to offshore oil and natural-gas facilities, most of which remains shut down nearly a week after Hurricane Rita came ashore last Saturday morning. The Gulf of Mexico accounts for roughly one-quarter of U.S. oil and natural-gas production.
Even when existing production is restarted, the hurricanes have damaged so many drilling rigs that efforts to increase Gulf production of oil and natural gas will likely be severely hampered. Current assessments are that the two hurricanes either sank or seriously damaged 13 drilling rigs, which is 12% of the Gulf rig fleet. As a result, that will make drilling more expensive, adding yet another element to the upward pressure on energy prices.
Finally, although Houston area refineries are firing up operations, the seven refineries in the hard-hit Port Arthur and Lake Charles areas will probably take longer than initially thought because of problems in getting reliable power to those facilities. About 20% of U.S. refining capacity was shut down for at least some period of time by the hurricanes.
It is becoming clearer each day now that at least a substantial amount of the initial information coming out of New Orleans in the aftermath of Hurricane Katrina was either exaggerated or misinformation. One such piece of misinformation was that large numbers of murders were occurring as a result of gunshots.
Commenting yesterday on the fact that only seven gunshot victims had been identified in the autopsies done on the first 650 or so bodies recovered from New Orleans, Coroner Frank Minyard made the following observation:
"Seven gunshots isn't even a good Saturday night in New Orleans."
September 29, 2005
Following on this post from yesterday, Chevron Corp.'s announcement that its Typhoon tension leg platform was severed from its moorings by Hurricane Rita and is floating upside down in the Gulf of Mexico dovetailed with the news that natural-gas futures on the New York Mercantile Exchange skyrocketed 10% to almost $14 per million British thermal units, which is its highest closing on record.
Natural-gas futures on the Nymex for delivery in October rose $1.251 to $13.907 per million BTUs. The expiration of the October contract at the same time that the delivery point for Nymex futures, Louisiana's Henry Hub, which has been closed down for the past week, added to the uncertainty and volatility in the market.
As a result, the Natural Gas Supply Association -- an association that represents producers and marketers -- issued this alert (pdf) that colder weather in the East combined with hurricane-related supply disruptions along the Gulf Coast will likely translate into substantially higher natural-gas prices across the U.S. this winter. The damage from the two major hurricanes in the Gulf over the past month have delayed or halted production of about 5% of the annual U.S. production of natural gas from the Gulf of Mexico, and that reduction in domestic natural gas production cannot be readily replaced with imports.
As for the Typhoon platform, it is floating upside down after the deep-water facility took a direct hit from Rita. Although Chevron has not announced whether the massive platform can be salvaged, my sense is that it's probably a total loss because its engines, pumps and living quarters are probably unsalvageable. The Typhoon is located in 2,000 feet of water in the Green Canyon area approximately 165 miles south-southwest of New Orleans.
Following on previous posts here and here regarding Houston's hurricane evacuation plan, Texas Monthly editor and former Houstonian Paul Burka weighs in on the plan in this OpinionJournal op-ed. Mr. Burka does not offer anything new here in terms of a solution, but he does do a good job of framing the key issue:
There is no way that government can assure that the people on the roads are the ones who are in the most danger, those from Galveston and the low-lying areas near Galveston Bay. Common sense needs to be restored to the evacuation process, so that people with the greatest risk of danger will make the decision to leave, and those with the least risk will stay off the roads.
September 28, 2005
In his Wall Street Journal ($) Business World column today, Holman Jenkins picks up on a theme of several previous posts (here, here, here and here) that point out that governmental policies that distort risk analysis virtually guarantees that natural disasters in hurricane-prone areas will be increasingly costly:
Louisiana's Sen. Mary Landrieu offered a perfect expression on CNN on Sunday of where the new blank-check compassion is leading us: "Wolf, poor families were crushed. Middle-income families are staggering. And wealthy families have been just punched in the stomach. It is going to take a huge national effort for us to realize the importance of this Gulf Coast region."
To wit, everyone must be restored to their previous status and possessions, or better, at taxpayer expense.
Nobody criticized the handouts to New York after 9/11, which ratcheted up expectations of unlimited federal payouts when bad things happen on a large scale. Victim families got seven-figure checks because their loved ones died in a televised tragedy, though similar bounties aren't bestowed on families that lose loved ones in less visible tragedies.
This precedent has returned to haunt us on a giant scale in New Orleans and its hinterland. Why are such selective windfalls to the unfortunate necessary? The federal government already guarantees us retirement income and health care in old age; it provides insurance and health care for the poor. These commitments in excess of $70 trillion, if properly recognized, would have long ago brought the country up before a bankruptcy judge.
It would be insane, under the circumstances, to extend this safety net to subsidize entire regions that wish to build without making proper allowance for predictable geological and meteorological hazards. This is insurance not for life and health, but for "lifestyle," with the biggest benefits flowing to the least needy.
Sen. Landrieu and her Louisiana colleague, Republican Sen. David Vitter, have drawn up a bill for $40 billion in Corps of Engineers projects to encourage southern Louisiana to imagine itself immune to the weather. With near certainty, such a boondoggle would be the best way to guarantee an even more expensive disaster in the future.
This Financial Times article reports that preliminary assessments of the damage that Hurricane Rita caused to offshore oil and gas drilling and production facilities reflect that the damage is greater any other storm in history.
Rita's path -- which was west of the path of Hurricane Katrina last month -- tore through an area of the Gulf of Mexico that contained a large amount of exploratory rig activity. Given the apparent damage to the rigs, the biggest impact from the storm may be that it will exacerbate an already tight market for rigs in the region. As a sign of just how precious rigs are becoming to the market, The Woodlands=-based Anadarko Petroleum Corp., one of the biggest U.S. independent exploration and production companies, raised eyebrows in the energy industry earlier this week by committing to a rig six years in advance.
Oh, how times have changed in the exploration and production business.
September 27, 2005
Joel Kotkin is an Irvine Senior Fellow at the New America Foundation and is the author of The City: A Global History (Modern Library, 2005). In this Opinion Journal op-ed, he compares the disparate preparations of New Orleans and Houston to the two recent hurricanes, and makes several useful recommendations regarding planning for natural disasters and development of urban areas on the Gulf Coast, including the following:
[The Gulf Coast region], with the notable exception of New Orleans, is one of the fastest growing in the U.S. Its relatively low costs and balmy climate have turned it into the "opportunity coast." Yet clearly the Gulf's history has shown that ignoring nature has its perils. Few now remember Indianola, south of Houston. Until it was wiped out by hurricanes, first in 1875 and then again in 1886, it was Texas's second-largest port. Today, most of that city lies under water.
The other, better-known case, is Galveston. Before a 1900 hurricane--which took 6,000 lives--it was the premier port and commercial center on the Texas coast. After the hurricane, the flow of commerce shifted inexorably to inland Houston, which was, and remains, better protected from the Gulf's annual tantrums. Such lessons should guide development along the Gulf in the coming years. For one thing, it may make sense to use marketplace mechanisms -- in the form of insurance premiums -- to let developers accurately assess the risk of new development. After all, federal assistance may be limited in the future. Some places may need to be abandoned. Whole towns already have been demolished for safety reasons in parts of the Mississippi flood plain as have homes in some of the riskier parts of east Texas. Programs to buy houses from existing residents, move towns to higher ground and create new greenbelts, will benefit the environment--not to mention the taxpayers--by relieving them of the burden of subsidizing repeatedly flooded areas.
A less extreme but equally sensible course can be applied throughout the Gulf region by steering new development--through either environmental or insurance restrictions--further out into the interior.
More broadly, as a nation, we may want to consider ways to encourage greater development further inland. Americans have been crowding into the coasts for generations, even though one of our great assets is the broad interior hinterland. Our continued population growth -- from 310 million now to 400 million by 2050 -- may make repopulating the hinterlands more economically viable. Instead of offering "homesteads" or funds for repeated rebuildings on the crowded, and sometimes dangerous, coasts -- particularly in below-sea-level New Orleans -- it might make more sense to encourage settlement and investment deeper into our nation's interior.
This was the essence of much of 19th-century federal policy, which gave incentives for canals and railroads, as well as providing cheap or free land on the Plains. This could also bring new life to parts of country that have been losing jobs and people for a generation, but may now be ready for revival. With the Internet and small-jet travel, some of these areas, such as the Dakotas, are already showing signs of becoming more competitive in the national and global economy. It is a trend worth boosting, and may come to be the most attractive strategic lesson to emerge from Katrina and Rita.
Read the entire piece. Mr. Kotkin makes a valid point, which is that the federal policy promoting development of coastal areas -- accomplished through such mechanisms as federal subsidies of flood insurance and related federal bailouts of storm-ravaged areas -- distorts rational economic decision-making. Let's rebuild New Orleans, but on a rational basis and without the distorted decisions that often result from the incentive to grab well-intended but counterproductive federal handouts.
On the heels of Entergy Corp.'s decision to place its New Orleans subsidiary in bankruptcy last week on the day that Hurricane Rita barreled into the Gulf Coast at the Texas-Louisiana border, the utility is now dealing with serious damage to its power infrastructure that is threatening to stall the recovery effort in East Texas from the storm.
On Monday, Entergy's Texas subsidiary commenced rolling blackouts in the area of far north Houston that it services, including The Woodlands. The move was made to reduce stress on the utility's damaged electrical system after Hurricane Rita and related tornadoes downed power lines and disabled most of the utility's power plants. A total of almost 1.25 million accounts were without power as of Monday in East Texas and Western Louisiana.
One of the biggest problems facing Entergy is the damage to the company's huge Roy S. Nelson power plant near Lake Charles, which suffered substantial damage during the hurricane. That plant generates power for a large part of Entergy's service area in East Texas and Western Louisiana, and the high voltage power lines that carry the power throughout the region were so badly damaged in the storm that Entergy is having problems getting electricity to some parts of its Texas service area. Entergy announced that it was about 30% short of the power it needs to meet the local needs of a four county area that it serves in the far north and east areas of Houston because only three of the 13 power plants that the utility normally relies upon were in a position to furnish power yesterday. As a result, the company initiated the rolling blackouts on a day in which temperatures in the area were around 100 degrees, and those blackouts will continue indefinitely.
Outages in the areas serviced by Entergy are more severe than in Houston. Inasmuch as Entergy draws its power from the giant electric network known as Eastern Interconnection, its power base had been hit hard by both Hurricanes Katrina and Rita. In contrast, Houston draws its power from companies within the Electric Reliability Council of Texas ("Ercot"), which escaped from Rita relatively unscathed. Texas has maintained its transmission system and power plants as a separate grid in order to keep that system under state control, whereas the system from which Entergy draws power is an interstate system that is regulated by the Federal Energy Regulatory Commission.
As of Monday, Entergy reported over 650,000 metered accounts in Louisiana and Texas that were without power as a result of damage from the two recent storms.
September 26, 2005
John Fund explores in this OpinionJournal piece the risk that long-standing Louisiana elements of corruption are likely to hijack a good part of the extraordinary amount of federal aid that will be flowing into the state in the wake of Hurricane Katrina. That reality is likely not going to stop or slow the flow of such aid because, as William Easterly points out in this Foreign Policy (pdf) piece, such aid has the following beneficial effect:
The poor have neither the income nor political power to hold anyone accountable for meeting their needs--they are political and economic orphans. The rich-country public knows little about what is happening to the poor on the ground in struggling countries. The wealthy population mainly just wants to know that "something is being done" about such a tragic problem as world poverty. The utopian plans satisfy the "something-is-being-done" needs of the rich-country public, even if they don't serve the needs of the poor.
Before we spend $200 billion on New Orleans disaster relief, can we just pause for about three seconds, please? That should be long enough to divide one number by another. The numbers I have in mind are, on the one hand, $200 billion, and, on the other hand, 1 million people—the prestorm population of the New Orleans area, broadly defined.
Two-hundred billion divided by 1 million is 200,000. For the cost of reconstructing New Orleans, the government could simply give $200,000 to every resident of the region—that's $800,000 for a family of four. Given a choice, which do you think the people down there would prefer?
Based on my anecdotal experience in talking with New Orleans evacuees during Houston's relief effort, I can say unequivocally that every evacuee would prefer to receive direct aid over throwing federal relief funds into the black hole that is Louisiana state government.
Hat tip to Arnold Kling for the lines to the Easterly and Landsburg pieces.
This previous post explored the role of federally-subsidized flood insurance in attracting capital investment in New Orleans that probably would not have occurred had the owners of the capital been faced with paying the cost of private flood insurance. Until Hurricane Rita developments took us a bit off track, I had been meaning to pass along this NY Times article about a batch of lawsuits by plaintiff's lawyers and Mississippi Attorney General Jim Hood that seek to eviscerate flood exclusion provisions in homeowner's liability insurance constracts and make the insurers responsible for damages caused by flooding from Hurricane Katrina For those of us who prefer to pay less rather than more for such insurance, these lawsuits are a real bad idea, as the following and this OpinionJournal piece explain.
Insurers have long had flood exclusions in their insurance contracts, which is one of the primary reasons why the federal government got into the business of subsidizing flood insurance in the first place. The reason for this is that floods are not a typical insurable risk, which insurers normally spread among a large pool of insureds who are subject to the risk through collecting premiums from that pool. Insurers then use the premium funds from that pool to compensate the relatively few who actually suffer accidents from the risk. Floods are also not a typical insurable risk because the only people who buy flood insurance are those who are likely to be flooded, which makes it impossible to spread risk over a large enough pool of insureds. Finally, floods tend to be widespread and recurring, so they cause huge losses that require equally huge pools to cover the losses. That's why private flood insurance is very expensive.
However, Attorney General Hood is now attempting to set aside these flood exclusions in private insurance contracts in the wake of Katrina as being "unconscionable." Similarly, well-known Mississippi plaintiff's lawyer Dickie Scruggs is following up with other lawsuits in which he contends that the insurers engaged in deceptive trade practices by excluding flood coverage arising from storm surge from their contracts. Messrs. Hood and Scruggs are taking these positions despite the fact that federally-subsidized flood insurance has been promoted in the region for about 40 years and relatively few Mississippi coastal residents have bothered to buy it, presumably because either they did not want to pay extra for it or they assumed that the feds would bail them out in the event of a Katrina-like catastrophe, anyway.
So, Messrs. Hood and Scrugges are demanding that private insurers pay for Katrina flood damages even though the insurers never collected any flood premiums over the years and thus, have no such reserves dedicated for that risk. Inasmuch as insurers are already liable for an estimated $50-70 billion in insured losses, adding another $15-20 billion in uninsured flood losses would ensure that at least a few insurers would end up in chapter 11.
But there would be even a more draconian result if Messrs. Hood and Scruggs are successful in their lawsuits. Insurance companies would have to assume that flood risk is a part of the insured risk, regardless of the exclusions in the insurance contracts. Consequently, the insurers would either charge you and me higher premiums -- certainly at least hundreds of dollars annually -- to cover this risk, or they could simply stop writing policies at all in the Gulf Coast region. That would reduce the competition among insurers to provide policies to all of us, which would also ratchet up the cost of such insurance.
Finally, one has to ponder how Mr. Hood -- a governmental official who has at least an indirect responsibility to encourage reconstruction of the battered regions of his state -- rationalizes taking actions that will increase the cost of liability insurance and thus, make it more expensive for Mississippi citizens to rebuild. Hopefully, a common sense opponent to Mr. Hood will appear in the campaign for the next election who will point that out to Mississippi voters.
Update: Professor Ribstein notes the even wider impact of the Mississippi insurance lawsuits on respect for the rule of law:
[N]obody’s safe if courts don’t enforce contracts. How could the insurance industry ever be sure it was excluding a risk if can't enforce this clearest exclusion of all? How could any company ever be sure it was limiting the scope of any promise?
Doug Simpson over at Unexpected Consequences also reviews the effects of the Mississippi insurance lawsuits.
September 25, 2005
First, the Houston community responded to the worst natural disaster in America in decades by taking in tens of thousands of evacuees (posts here, here and here) from New Orleans and the central Gulf Coast who had almost everything but their lives. Then, as that relief effort was winding down, Houston confronted Hurricane Rita, a category 5 storm bearing down for a direct hit on the city. Implementation of the city's evacuation plan led to an estimated 2.7 million Houston area residents hitting the road, resulting in unprecedented traffic gridlock and gasoline shortages throughout the region. After Rita veered off to the east to make landfall on the Texas-Louisiana border, Houston is now dealing with the not insubstantial problem of how to have 2.7 million people return to their homes in the region without experiencing the same type of gridlock and shortages that occurred when they left.
Despite all that, the initial signs are that the feared economic repurcussions of damage from Hurricane Rita will not be all that bad. Damage to the vital concentration of oil refineries along the Texas coast appears to be relatively light, and U.S. Coast Guard aerial reconnaissance of the Ports of Houston, Galveston and Port Arthur and their related shipping lanes showed few problems as a result of the hurricane. The biggest problem at the Port of Houston is that the winds out of the north as the storm pushed onshore pushed water out of the Houston Ship Channel and Galveston Bay so that those relatively shallow waterways do not have enough water to accomodate deep sea vessels at this point. However, the water levels should should return to normal levels by Monday or Tuesday, so no substantial disruption in Port operations are expected.
Inasmuch as prices for gasoline and diesel fuel would rise if Houston-area refineries and ports are slow to resume operations, the light damage reports were good news for markets that are still recoiling from the economic impact from the damage to the New Orleans area from Hurricane Katrina.
However, even without extensive damage to refineries and Gulf oil and gas production facilities, the energy industry's pre-Rita shutdown will at least stretch gasoline supplies for the next several weeks. Sixteen refineries were shut down in anticipation of Rita, and that accounts for almost 25% of U.S. refining capacity. That's nearly twice as much of the U.S. capacity that was shutdown prior to Hurricane Katrina, and only about half of that capacity affected by Katrina has come back on line. It normally takes between a week and two weeks for a shutdown refinery to resume normal operations.
Nevertheless, good news emanated on Saturday from the Houston area refineries. Exxon Mobil Corp.'s Baytown plant, which is located between Port Arthur and Houston and is the nation's largest, announced that it planned to restart a number of units beginning today. Terminals and pipelines have already reopened, and the 557,000 barrel-a-day refinery is already delivering gasoline out of storage. Similarly, Royal Dutch Shell PLC announced Saturday that its 340,000 barrel-a-day Deer Park refinery near Houston was not damaged and that both its North Houston and Pasadena distribution terminals are fully operational. BP PLC's huge Texas City refinery is thought to be in the process of restarting, while the smaller Marathon Oil Co. and Valero Energy Corp. refineries in Texas City were also moving towards restarts after reporting no serious damage.
The initial damage reports are worse from the refining area near the Texas-Louisiana border where Rita made landfall. The Port Arthur-Beaumont area has four refineries and Lake Charles, La. just across the border has three plants. Although damage assessments are still ongoing at those plants, the restarting of those plants will take longer both because of probable greater damage than to the Houston area plants and the lack of power, which will probably not be remedied until later in this week.
As a result of the foreoing, crude oil futures fell sharply in unusual Sunday trading as it appeared that oil rig and refinery damage from Hurricane Rita was less than originally feared. Oil prices had climbed steadily last week as Rita churned through the Gulf of Mexico as a category 5 and then 4 hurricane, but fell Friday as the storm weakened before its early Saturday morning landfall just south of Sabine Pass, La. A barrel of light sweet crude for November delivery was down $1.40 at $62.80 on the New York Mercantile Exchange, and unleaded gasoline fell 10.46 cents to $1.98 per gallon. Sunday trading via the Nymex electronic Access system and on London's International Petroleum Exchange was arranged late last week in an effort to mitigate energy market volatility resulting from Hurricane Rita. However, the lack of damage to the facilities appears to have deflated interest in early trading. On London's IPE, Brent crude futures fell $2.59 to $62.01 in light trading.
September 24, 2005
A couple of days ago it was gridlock as an estimated 2.7 million Houstonians evacuated out of fear of Hurricane Rita. Today, it appears that at least a portion of that gridlock is developing coming in the opposite direction as many residents attempt to return to their homes despite a quickly-developed government plan to stagger the return of the evacuees.
During all of this, I have been giving some thought about Houston's evacuation plan, as reflected by this earlier post. In 1983, Hurricane Alicia -- a minimal category 3 storm -- made a direct on Houston and Galveston. There was no evacuation to speak of and, thus, no gasoline shortages. The storm killed 22 people and caused damage costing about $4 billion in 2005 dollars. On the other hand, Hurricane Rita -- a stronger category 3 storm than Alicia that did not make a direct hit on Houston and Galveston -- has already caused more deaths (24 in the Dallas bus crash alone) than Alicia and resulted in a regional gasoline shortage, while the direct costs of the storm will likely be much smaller than Alicia's.
My purpose in pointing this out is not to criticize the governmental officials' execution of the Houston evacuation plan, which has been thoughtful and generally good. My thoughts are more with regard to the plan itself, which during implementation encouraged all Houston residents -- even those in non-mandatory evacuation areas -- to evacuate. The result was that, despite the fact that Houston has the most highway lane-miles per capita of America's large metro areas, dangerous gridlock and accidental deaths occurred, and the area experienced severe gasoline shortages as a result of the huge spike in demand. Moreover, the gridlock precluded suppliers from being able to deliver new supplies of gasoline and other goods, and despite the good faith efforts of the governmental officials, similar gridlock is occurring as residents return.
This is not to suggest that a hurricane evacuation plan is unnecessary for the Houston area. Clearly, the people in the areas of the metropolitan area that would be flooded by a strong storm surge need to get out. Similarly, arrangements need to be made for the poor and infirm, and for those folks who do not live in sufficiently solid structures to withstand a strong hurricane. However, if Alicia and Hurricane Carla in 1961 taught us anything, then it's that most Houstonians survived the storms just fine by battening down the hatches and remaining in their homes. Moreover, the recovery from such a storm is facilitated in many ways by having property owners tending to their property immediately after the storm rather than attempting to find the back way home from afar.
Just some thoughts to ponder as Houston attempts to return to normal after experiencing one of the largest evacuations in American history. And in the meantime, enjoy Ken Hoffman's alternately hilarious and insightful column about Houston's Rita experience.
Update: The Chronicle's Dan Feldstein and Matt Stiles weigh in on many of the same issues discussed above in this post-Rita article. And the Chronicle's Eric Berger -- who has provided both exhaustive and exhausting (he had to evacuate his family from Clear Lake) coverage of both major hurricanes over the past month -- notes the following in his Monday post on Rita:
Why were people so far away from the coast leaving town? In College Station, my wife ran into a man who had evacuated from Conroe.
The always insightful Tyler Cowen over at Marginal Revolution is already thinking about how to improve Houston's evacuation plan:
"Pay people who stay behind. By the day, of course. And only if they own cars."
Tyler's plan makes a lot of sense, particularly for folks who live in sturdy structures in non-flood prone areas. The evacuation of Houston ended up being arduous because an unanticipated large number of people evacuated who did not live in the mandatory evacuation areas. Most of those folks would have been better off battening down the hatches and staying put, but it's hard to criticize folks -- particularly those who do not have a safe haven to ride out such a storm or who are worried about infants -- for wanting to get the hell out. The number of non-mandatory evacuees clearly surprised governmental officials and that resulted in a the delay in getting all main freeway lanes going in the same direction to accomodate the evacuees.
Following up on this post from earlier this week, Entergy Corporation's New Orleans subsidiary filed a chapter 11 case on Friday in New Orleans (that filing location will certainly cut down on the number of lawyers attending the first round of hearings). Neither the Entergy parent company nor any of its other subsidiaries were included in the bankruptcy filing, which is important because about 250,000 of Entergy's Gulf Coast unit's 1.3 million Texas customers are currently without power as a result of Hurricane Rita. The difference between those two units is that those 250,000 customers without power are still Entergy customers. In stark contrast, Entergy's New Orleans unit has lost a staggering 130,000 customers as a result of Hurricane Katrina, and its unclear how many of those customers will even return to the New Orleans region.
The filing occurred after Entergy concluded that the estimated $750 million to $1.3 billion cost of rebuilding the unit's electric system from Hurricane Katrina-related damage far exceeds what the utility's customers can afford to pay. Immediately upon filing, Entergy's parent corporation requested bankruptcy court authority to advance the New Orleans unit $150 million to head off an emergency liquidity crisis and to provide funds to continue the rebuilding effort. Even that emergency financing was dependent on the parent company obtaining emergency concessions from its lenders to avoid a cross-default on its $2 billion emergency line of credit. Although the New Orleans unit's reorganization plan is in the infancy stages, Entergy is attempting to arrange a plan that is based on insurance proceeds, federal support and a limited rate increase to cover rebuilding costs.
As predicted during the morning yesterday, the Houston metropolitan area was spared a direct hit from Hurricane Rita, which came onshore at about 2:30 a.m. this morning at Sabine Pass near the Texas-Louisiana border.
In The Woodlands, which is on the north side of the Houston metro area (pdf region map), the strongest winds -- which were probably 40 - 50 mph steadily with gusts of 75 mph -- occurred between 3:00 a.m. and 6:00 a.m., and have decreased steadily since then. Rain has not been particularly heavy, and my home has had power throughout the storm, although there are wide areas of Houston and the north end that have lost power. Interstate 45 to the east of The Woodlands appears to be a rough demarcation line on the north end where the wind and rain have been worse on the east side of that line. The area between Huntsville and Livingston to the north has been getting hammered hard over the past couple of hours, and the East Texas area around Jasper (just north of Beaumont) is really bearing the brunt of the storm at this point.
Conditions will gradually improve over the next several hours and, by noon or so, we will be able to venture out safely and assess the damage. My sense is that the primary damage in this area will be relatively light wind damage caused by fallen tree limbs, roof damage, broken windows and the like. Frankly, I'm looking forward to venturing out into the weather today because one of the few fringe benefits of these storms is that they cool down the atmosphere greatly, which is much appreciated in these parts because we have been experiencing an excrutiatingly hot late summer -- the high temperature was 95 degrees yesterday.
Finally, I want to pass along my heartfelt thanks for the dozens of phone calls, emails, blog comments, blog posts and the like over the past several days expressing concern and conveying goodwill and prayers for my family and me. The outpouring of concern has been greatly appreciated by my family and me, and we are humbled by the gracious expressions of support. Thank you all very, very much.
September 23, 2005
Three emergency shelters have been established in The Woodlands to care for evacuees who got caught up in the bottleneck on I-45 leading out of Houston. The shelters are at The Woodlands High School at 6101 Research Forest Drive in The Woodlands 77381-4902, The Woodlands College Park High School at 3701 College Park Dr. in The Woodlands 77384, and The Woodlands McCullough Junior High School at 3800 South Panther Creek in The Woodlands 77381-2799. The Reverend Howard Huhn, the Minister of Outreach at The Woodlands United Methodist Church has sent out this email requesting the following:
Because of the traffic associated with Hurricane Rita, our local high schools (McCullough, TWHS, College Park) have opened as shelters. They are in need of bedding. If you have bedding available, please drop it off directly at the schools.
Thank you for being Christ to others.
Minister of Outreach
The Woodlands United Methodist Church
Jeff Master's latest update of just a few minutes ago indicates that experts are increasingly forming a consensus that Houston and Galveston will avoid a direct hit from Hurricane Rita:
The latest computer models are tightly clustered around a landfall point just west of the Texas/Louisiana border. Confidence is high in this forecast. Houston and Galveston should escape major wind and storm surge damage, and only experience maximum sustained winds of 60 mph with gusts to 85 mph. It is still too early to tell what will happen after landfall, as the models all take Rita different ways. A major rainwater flooding problem will ensue after Rita's landfall, with 10 - 30 inches of rain falling over a large area of Texas and Louisiana.
For the first time since Hurricane Rita entered the Gulf earlier in the week, the cone of uncertainty that shows the range where the hurricane force winds will hit does not include a substantial portion of the Houston area, essentially that part west of I-45.
Houston awakens this morning to the news that the two most likely locations for landfall are Port Arthur and Galveston. The cone of uncertainty extends from southwestern Louisiana on the east to the entire Houston metro area on the west. The National Hurricane Center is currently predicting landfall to occur in Jefferson County near Port Arthur, while local experts are predicting landfall slightly west in Chambers County nearer Galveston Bay (county map here). As Rita continues to move slowly with its eye about 260 miles southeast of Galveston, a consensus has developed that the storm will move into northeast Texas after landfall and then stall on Sunday and Monday, potentially causing huge amounts of rainfall of the type that flooded the Houston area during Tropical Storm Allison in 2001. Landfall is expected at this point sometime in the early morning hours of Saturday, probably between 5 a.m. to 8 a.m., although heavy rainfall and strong winds throughout the Houston area will be experienced well before then.
Houston, get ready to rumble.
For the sake of the University of Houston football program, I am hoping that head football coach Art Briles had his tongue placed squarely in his cheek during his weekly radio show Wednesday described by Chronicle sportswriter Richard Justice:
"OK, there's no requirement that your local college football coach has to read the New York Times Book Review.
But shouldn't he know something.
UH's Art Briles went on the radio Wednesday and just about made a fool out of himself.
When he was asked if this week's game with Southern Miss would be cancelled, he said he hadn't heard anything about it. He also said he hadn't heard anything about a hurricane.
If I'm the president or athletics director at UH, I'm wondering if this guy might have a little too much tunnel vision."
September 22, 2005
After the jolting early morning news that Hurricane Rita was heading directly toward Galveston Bay, the track models have been trending further eastward for most of the day. The current most likely projection is that the storm will make landfall east of Galveston Bay closer to Port Arthur and Beaumont and, if that happens, most of the Houston metro area would at least be spared a direct hit by the most damaging winds around the storm's eyewall.
However, the key words here are "most likely," which means that there is a very small percentage difference between the storm making landfall at one spot over another. Stated another way, the chance that the storm could come onshore directly on Galveston Bay is still very likely. The storm is reacting to the movement of three weather systems to its north, and it's simply impossible at this point to determine with any reasonable degree of certainty where the storm will make landfall between Freeport, Tx to Lafayette, La. My sense is that it will not be until early Friday morning before the experts will really have a good handle on how the storm is finally going to react to the weather systems to its north and thus, where landfall will occur. Moreover, even that very good prediction can be as much as 30-50 miles off if the storm wobbles even slightly while coming onshore. Remember, Katrina wobbled east at almost the last minute and spared New Orleans a direct hit.
Thus, the bottom line is to remain vigilant in following this storm. It looks like the storm will be at least a strong category 3 when the it somes onshore, and a storm of that magnitude -- even if it comes onshore well east of Galveston Bay -- will cause very dangerous wind and rainfall in the entire Houston metro area.
With the eastern shift of the projected path of Hurricane Rita directly into the part of the Houston metro area that contains a huge number of some of the nation's largest oil refineries and petrochemical facilities, Rita's economic ripples have now turned into waves with the distinct possibility that they could turn into an economic tsunami.
It now appears almost certain that Rita will substantially disrupt operations at a significant number of the oil refineries that transform crude oil into gasoline, diesel and other products. The only question is how long those facilities will be down and how much gasoline prices will increase as a result of the shutdown. At least eight refineries in the Houston area will shut down soon as they began scaling back operations yesterday. Inasmuch as four refineries in Louisiana and Mississippi have been closed as a result of damage from Hurricane Katrina last month, almost 20% of U.S. refining capacity will shutdown with the closing of the Houston area facilities, which will only reduce already tight inventories of gasoline that have pushed prices to record levels. To make matters worse, the new projected path of the hurricane would also cause probable extensive damage to offshore oil and natural gas platforms and pipelines that were west of the ones that were damaged in Katrina's path. I think it's safe to say now that the U.S. energy industry has never had to deal with anything on the magnitude of the 2005 hurricane season.
To put this in perspective, the main worries that energy markets are dealing with are the supply of gasoline for the next few days and the amount of natural gas that will be available for the winter months when that fuel is used to heat homes across the entire United States. About 25% of U.S. oil and natural gas production comes from the Gulf of Mexico region and the entire Gulf Coast region contains a third of U.S. refining capacity. So, higher gasoline prices are a certainty and winter heating bills will also increase substantially. According to the U.S. Minerals Management Service, almost three days of natural gas production have already been lost during this hurricane season and that amount is clearly increasing because about half of the Gulf natural gas production remains shut-in. This is an even bigger problem than a reduction in oil production because the nation's capability to import natural gas is much more limited than oil.
Reflecting these concerns, the near-month futures price of natural gas was up 1% to $12.59 per million British thermal units yesterday in trading on the Nymex, which means that the price is up over 54% since the beginning of August. November light, sweet crude futures settled up 60 cents on the New York Mercantile Exchange at $66.80 a barrel after hitting a high of $68.27. October Nymex gasoline futures settled up 7.65 cents at over $2 per gallon. However, prices rose sharply in overnight electronic trading after the Wednesday Nymex session ended with crude futures up 65 cents at $67.45 a barrel and gasoline up 4.19 cents at $2.095 per gallon.
Finally, in addition to the impact on the Houston area refineries, Hurricane Rita also poses a major threat for the chemical and petrochemical plants that exist along side the refineries in the Houston area and along the Texas coast. More than 160 plants from Port Arthur to Freeport are in the potential path of the hurricane. That region generates 50% of U.S. chemical-production capacity, and most of those chemical plants were in the process of shutting down yesterday in preparation for the hurricane.
Accordingly, less than a month after Houston showed just how important it is to our nation when it opened its arms to tens of thousands of evacuees from New Orleans and the central Gulf Coast region, Hurricane Rita is about ready to show the nation just how important Houston is to the nation's economic health. It could be one very tough lesson.
Update: James Hamilton provides his usual measured analysis of the probable economic impact of Rita.
The latest runs of two key computer models, the GFS and GFDL, now indicate that the trough of low pressure that was expected to pick up Rita and pull her rapidly northward through Texas will not be strong enough to do so. Instead, these models forecast that Rita will make landfall near Galveston, penetrate inland between 50 and 200 miles, then slowly drift southwestward for nearly two days, as a high pressure ridge will build in to her north. Finally, a second trough is forecast to lift Rita out of Texas on Tuesday. If this scenario develops, not only will the coast receive catastrophic damage from the storm surge, but interior Texas, including the Dallas/Fort Worth area, might see a deluge of 15 - 30 inches of rain. A huge portion of Texas would be a disaster area.
This scenario is similar to that of Tropical Storm Allison in 2001 that caused catastrophic flooding throughout the Houston metropolitan area. Moreover, with Allison, Houston did not have to deal with the catastrophic wind damage that is almost certain to result from Rita. Although the new projected path of Rita is not good news for Houston, the prediction that the storm might slow down at landfall and stall over Texas and Louisiana is even worse.
September 21, 2005
In the midst of pre-hurricane gasoline and bottled water shortages -- and in anticipation of probable power outages resulting from Hurricane Rita -- this report is not giving me warm and fuzzy feelings:
Facing huge costs for rebuilding its Hurricane Katrina-devastated systems along the Gulf Coast, utility giant Entergy said Tuesday that it will consider filing for bankruptcy protection for its New Orleans unit.
Entergy, whose Entergy New Orleans unit has lost up to an estimated 130,000 customers because of the hurricane, estimates the unit's storm-related costs at $325 million to $475 million.
The company put its total estimated costs for repairing and replacing electric and gas facilities damaged by the Aug. 29 storm at $750 million to $1.1 billion.
Entergy is the utility company for a good part of the northern part of the Houston metro area, including The Woodlands.
Crude-oil prices surged on Monday as it became clear that Tropical Storm Rita would threaten the Gulf Coast, then prices fell on Tuesday morning when the National Hurricane Center forecast a more southerly path for Rita that might spare the Houston area, and then yesterday afternoon and overnight, prices rose again as the storm evolved into a major hurricane.
Such are the vagaries of predicting hurricane tracks and commodity markets.
Oil prices settled Tuesday afternoon more than $1 a barrel lower than Monday's closing price as early Tuesday projections had Rita coming in closer to Freeport so that the brunt of the storm would miss the Houston area refineries. Those initial reports triggered a drop of more than $2 a barrel in oil prices, but those prices recovered quickly during the day as Rita strengthened into a major hurricane and evacuations from offshore rigs picked up. At the New York Mercantile Exchange, the October crude contract ended $1.16 lower from its Monday high at $66.23. October gasoline closed at $1.9766 a gallon, down 6.61 cents for the day and October heating oil, up more than 20 cents Monday, ended at $2.0113, down 2.71 cents.
Refineries that are located on the southeast side of the Houston metro area in or near the cities of Pasadena, LaPorte, Texas City, and on east toward Beaumont and Port Arthur generate about 13% of total U.S. refining capacity. Although Hurricane Rita could cause even more damage to the offshore drilling and production infrastructure in the Gulf of Mexico that was already extensively damaged by Hurricane Katrina, the trading markets' even more critical concern at this point is that Rita will hammer Houston's refineries, which would have a huge effect on U.S. refinery capacity.
James Hamilton made a good point awhile back that underscores the importance of Houston's refineries. Older refineries cannot process heavy, sulfur-rich "sour" crude oils (Mexico's Maya grade crude is an example of a common sour crude) and even newer refineries cannot process such sour crudes as efficiently as light, "sweet" crude oil. Consequently, if Houston's modern refinery facilities are shut down by the storm, then demand for light, sweet crude will rise and push its price even higher relative to lower-grade crudes. Inasmuch as about 75% of the crude oil that OPEC countries produced last year was sour, OPEC's promise to increase output has had little effect on trading markets that are more concerned about refinining capacity. Although OPEC has incrementally increased its production of sweet crude since 2000, world production of sweet crude has declined steadily since that time.
Finally, the Chronicle's Tom Fowler has this informative article today about the Houston area's refineries and the potential market impact of damage to those facilities.
Given that those of us living in the Houston and south Texas area are in for a wild ride over the next few days, I am passing along the hurricane information sites that I am reviewing frequently for up-to-the-minute information and analysis:
Eric Berger's SciGuy. Eric is the Chronicle's science writer who started his blog recently as a part of the weblog initiative that Chronicle tech writer Dwight Silverman promoted at the local newspaper. During Hurricane Katrina, Eric provided an extraordinary source of information and analysis, and he has been doing the same in the early stages of Rita.
StormTrack. A weblog that a couple of young fellows from the northeast started to provide up-to-date analysis of hurricane storm trends. Excellent resource.
The Google Map link to the upper Texas Gulf Coast.
And, of course, the National Hurricane Center site.
As all grizzled veterans of Hurricane Alicia in 1983 know (related Chronicle story is here), this is a serious situation for the Texas Gulf coast and it is time to prepare to batten down the hatches. If you are a relative newcomer to this area and have never been through an intense hurricane before, do not fall into the trap of thinking that the media and others are crying "wolf." This is a deadly serious storm that has the potential to be every bit as devastating to the Texas Gulf coast as Katrina was to the Louisiana-Mississippi-Alabama Gulf coast. As destructive as Alicia was in 1983 (it's eye came in on Galveston's West Beach and tore through the middle of Houston on a track that essentially followed I-45), it was a minimal category 3 storm. In comparison, Rita is shaping up to be a much more powerful storm that is comparable to Hurricane Carla, which was a category 4 (winds of 133-155 mph) storm that caused incredible damage to Houston and the upper Texas Gulf coast on September 11, 1961. Carla had the same minimum barometric pressure as the great 1900 storm that killed over 6,000 people in Galveston.
I hope I have gotten your attention.
September 19, 2005
Tropical Storm Rita is preparing to enter the Gulf of Mexico, and current predictions have it headed toward the Texas Gulf Coast by the end of the week. This is not good news, particularly for the oil and gas industry's Gulf operations, which have stablized at reduced production levels in the wake of Hurricane Katrina, but are producing at far below usual levels. Here is a download of a handy map of oil and gas interests in the Gulf of Mexico.
With gasoline inventories still low and a substantial portion of Gulf of Mexico oil and gas production remaining shut-in, another hurricane in the Gulf is not what the doctor ordered for the economy. This EIA Daily Report from this past Friday reflects just how precarious oil and gas production is in the Gulf at the present time. If Rita strengthens as expected over the warm waters of the Gulf, then we could experience a real double whammy of damage to Gulf oil and gas production, not to speak to the usual damage to the Texas Gulf Coast that results from such a storm. Hat tip to Calculated Risk for the links to the map and the EIA report.
Update: The latest National Hurricane Center projection has the storm headed straight for the West Beach of Galveston Island. Batten down the hatches!
Abraham Verghese, M.D., is the Joaquin Cigarroa Jr. Chair and Marvin Forland Distinguished Professor at the University of Texas Health Sciences Center in San Antonio. After volunteering at the Houston shelters during the relief effort for the Hurricane Katrina evacuees, Dr. Verghese's story of meeting the first hurricane evacuees that were sent to San Antonio resonated with me because it is similar to many conversations that I have had over the past couple of weeks with various evacuees:
Hesitantly, I asked each patient, "Where did you spend the last five days?" I wanted to reconcile the person in front of me with the terrible locales on television. But as the night wore on, I understood that they needed me to ask; to not ask was to not honor their ordeal. Hard men wiped at their eyes and became animated in the telling. The first woman, the one who seemed mute from stress, began a recitation in a courtroom voice, as if preparing for future testimony.
Read the entire unvarnished account. Also, check out this Bob Herbert NY Times piece that relates how the corporate owners of the hard-hit Methodist Hospital in east New Orleans responded to the flood after the hurricane by sending emergency relief supplies to the hospital. Unfortunately, the owners sent the supplies to the airport where FEMA officials confiscated them and sent the supplies elsewhere. Along those same lines, here is the story of a volunteer doctor during the relief effort who a FEMA official ordered to stop treating a patient because he was not registered with FEMA.
Finally, here is a helpful FactCheck.org compilation of stories relating to who knew what when in regard to Hurricane Katrina.
September 16, 2005
The Fifth Circuit Court of Appeals plan to re-open for business this week in Houston ran into a logistics problem -- furniture for the Court's personnel could not be delivered until this weekend. Accordingly, the Court has pushed back its re-opening date to September 21 and the new deadline for filing non-emergency pleadings is October 10. Here is the Court's announcement and related Order.
Meanwhile, this Chronicle article on the Fifth Circuit's operations notes that none of the Court's files in its New Orleans offices appear to have been damaged by the flood.
This Washington Post article reports that a survey by The Washington Post, the Henry J. Kaiser Family Foundation and the Harvard School of Public Health has found that less than half of all New Orleans evacuees living in emergency shelters in Houston said they will return to the Crescent City and that about two-thirds of those who plan to relocate are probably going to settle permanently in the Houston area.
The findings in the survey are consistent with my anecdotal experience in talking with evacuees while volunteering over the past couple of weeks at the George R. Brown Convention Center and at my family's church here in The Woodlands. Few of the evacuees who I have spoken with plan to return to New Orleans, primarily because they have lost everything and they do not believe that they will have any employment opportunities for a long time if they were to return. Those who have relatives in larger cities in the region tend to gravitate toward those family members, but few of the evacuees have any desire to move away from the region. I helped cook breakfast for some evacuees this past Tuesday morning, and one nice man put it to me in this way with a wry smile: "If we were to leave [the region], where would I fish?"
Finally, every evacuee with whom I have spoken has expressed heartfelt gratitude for the kindness and hospitality that Houstonians have shown them. One of my sons and I are looking forward to working the morning shift (4 a.m. to 10 a.m.) tomorrow at the Brown Convention Center, and it appears that we will be helping the last group of evacuees at the Brown prepare to move on to smaller shelters or apartments. Houston officials are projecting that the Brown Convention Center shelter may be able to be closed by as soon as the end of this weekend. The Astrodome and Reliant Convention Center shelters at Reliant Park are currently scheduled to be closed by early next week, although the Reliant Arena shelter at Reliant Park will probably continue to be City's center for processing evacuees to smaller shelters and permanent housing for several more weeks.
Finally, the NY Times carried this nice piece about Houston's civic efforts to assist the evacuees from the Gulf Coast.
Update: Just got word that the Brown Convention Center will close as a shelter after dinner next Tuesday, September 20.
September 14, 2005
The Port of New Orleans re-opened on a limited basis yesterday and plans to be at 80% of capacity within three months. Moreover, the nearby Port of South Louisiana and Port Fourchon on the Gulf Coast have also partially restored service, and the Port of Pascagoula, Miss. expects to resume service by early October. Although the focus of analysis on the economic effect of Hurricane Katrina has been on the oil and gas industry, the economic impact on shipping along the Mississippi River and Gulf of Mexico has also been severe, so the reopening of the ports in the New Orleans area is good news.
September 13, 2005
Former Houstonian Christine Hurt of the Conglomerate blog passes along a new Houston-based blog by two South Texas College of Law professors -- Tracy McGaugh and Kathy Bergin -- who are making daily treks to Reliant Park and sometimes to the George R. Brown Convention Center to provide insight into the experience of the evacuees at both locations. The new blog is called White Washing the Black Storm: We Are Watching.
Each day, the profs volunteer at the medical aid table and ask what medicine is needed. Then, the profs go to a local drugstore and buy the medicine needed. The blog has a link where you can donate to the cost of the medicine, which the profs have been largely subsidizing.
The blog also provides somewhat unvarnished commentary on the goings on at each shelter, which is an important component of the complete story regarding Houston's extraordinary effort to provide for the evacuees. It's not all peaches and cream out there, folks.
Petroleum futures fell to pre-Hurricane Katrina levels for the first time since the storm yesterday on news of heavy losses in refined products and market concern that that high gasoline prices have depressed demand for product. Earlier posts on the developing economic effects of Katrina over the past couple of weeks are here, here, here, here, here, here, here, and here.
Benchmark light, sweet crude oil futures for October settled at $63.34 a barrel on the Nymex Exchange, while Nymex gasoline futures for October settled down 8.60 cents at $1.8737 a gallon. Losses in heating oil futures on the Nymex were also substantial as the October contract settled down 8.22 cents at $1.8143 a gallon.
Despite the downward trend in the gasoline futures market, news on the Gulf oil and gas production front remained measured. Although operations at the Louisiana Offshore Oil Port were fully restored yesterday for the first time since the storm, oil production in the Gulf of Mexico showed only marginal improvement during the weekend as about 57.4% of daily output remains offline. Almost 60% of the daily total was offline as of this past Friday.
September 10, 2005
Will Wilkinson is a policy analyst at the Cato Institute in Washington and runs the smart Fly Bottle blog. In this TCS Central piece piece (blog link here), Mr. Wilkinson deliciously exposes the muddled thinking behind three recent op-eds written by NY Times columnist Maureen Dowd, Washington Post columnist Harold Myerson and NY Times columnist Paul Krugman that all contend that the principles of limited government and economic libertarianism caused the tragedy in New Orleans.
When I read Ms. Dowd's piece earlier in the week, it occurred to me that her remark "when you combine limited government with incompetent government, lethal stuff happens" rather naively presumed that less limited but competent government is a realistic alternative. However, Mr. Wilkinson's op-ed takes that observation several steps further and concludes:
Dowd, Krugman, and Meyerson evidently loathe free markets and limited government. And they also loathe the Bush administration. Apparently it would be nice for them if they could bundle their hatreds into a package of loathing, tie it up in spite, and burn it. So they try. But the package won't hold together, and they can't bash Bush without burning themselves. The most cursory inspection of the front page indicates that the difference between him and them is simply the details of their hostility to economic freedom and small government.
Read the entire piece for some refreshing clear thinking.
September 9, 2005
Following on this post from earlier in the week regarding the economic impact to Houston of the arrival of thousands of former New Orleans residents, Tyler Cowen over at Marginal Revolution provides his typically insightful analysis on the issue. Tyler notes that there are economic benefits and costs attributable to the arrival of the former New Orleans residents, and concludes:
Both the costs and benefits of resettlement will be overstated by partisans. The Houston boom won't last long, and the costs will net out to put the city in a roughly break-even position.
My sense is that Tyler's view is largely correct because most of New Orleans' larger businesses that could provide a big employment boost for Houston (i.e., the port, refineries, etc.) will remain in New Orleans due to the huge capital investments there. The one difference with the exodus from New Orleans from other analogous circumstances is the decimation in New Orleans of small businesses, which were the largest employer in the area. The jobs with the big employers will return to New Orleans relatively quickly, but the replenishment of the supply of jobs attributable to small businesses -- particularly small service companies -- will take much longer because a huge number of those businesses were wiped out by the storm and do not have the capital or demand necessary to re-start their business in the New Orleans area any time soon. Whether any significant number of those jobs are ultimately re-created in the Houston economy remains to be seen.
On a related economic note, the Chronicle's business columnist, Loren Steffy, has a good column in which he notes the prejudicial impact that the Bankruptcy Amendments of 2005 will have on many people who have been rendered insolvent as a result of Hurricane Katrina, not the least of which is the fact that such amendments increase the cost considerably of filing an individual bankruptcy case.
September 7, 2005
As noted in this earlier post, the closing of the credit-card issuer Capital One Financial Corp.'s purchase of New Orleans-based Hibernia Corp. had been delayed by the aftermath of Hurricane Katrina. Today, the parties to that transaction announced that Hibernia had agreed to a 9% reduction in the purchase price as the price of the deal was reduced to $5.0 billion from the original price of $5.35 billion. Cap One had planned to close its purchase of Hibernia this week, but the acquisition is now scheduled to close in the fourth quarter.
Speculation over Hibernia's fate over the past week had fueled sharp swings in the company's stock price and heavy trading in its short-term options. The stock price dropped about 10% last week, but then partially recovered on Tuesday as investors became more confident that the deal involving Louisiana's biggest bank in New Orleans and in Louisiana. It holds about 30% of the metropolitan area's deposits and around 20% of the state's deposits, and about 15% of the bank's total deposits are concentrated in the New Orleans area. Over half of the bank's 100 or so branches in the hurricane-ravaged area are still closed, which includes about 20 branches that were largely destroyed and, thus, will not reopen anytime soon.
For a more macro-update on how the markets are dealing with the aftermath of Hurricane Katrina, check out James Hamilton's erudite analysis.
The title of this post is from Holman Jenkins' insightful Wall Street Journal ($) column today in which he decries the role of federally-subsidized flood insurance in promoting the risk-taking that helped turn New Orleans into a disaster waiting to happen:
Professions of shock about the extent of the New Orleans disaster may be understandable from the broader public, but not from Louisianians themselves. Their disaster was the most predicted disaster in recent memory. The city's vulnerability was well documented and this is one case where you can't blame the press for taking its eye off the ball.
The policy implications were not lost on congressmen and federal officials either. A screaming match three years ago concerned a House bill to charge market-based flood insurance premiums to homeowners who filed frequent claims. Louisiana Rep. Billy Tauzin (since retired) denounced the bill as "an assault on the culture of South Louisiana." He was right.
The bill's author, Rep. Earl Blumenauer, put the issue in less hysterical perspective: "The notion that the federal government is just going to shovel money to people in harm's way is misguided, and I personally think it's cruel." He was right too.
Modern New Orleans was the ultimate expression of this high-rolling dynamic. In 2000, an unnamed city official succinctly explained the city's hurricane strategy to the trade publication Risk & Insurance: "We are below sea level and we do get floods sometimes, but it's not a real serious problem. You can still purchase flood insurance."
. . . [a] corollary to the city's acceptance that sooner or later it would be destroyed by a hurricane (and rebuilt using insurance money) was a reliance on evacuation to spare human life in the event of a Category 4 or worse storm, of which there had been four since 1899. That would have meant evicting residents every time a hurricane threatened, a policy that likely would have collapsed after the first false alarm, had a decrepit municipal government cared enough to try it. Instead the city defaulted to an evacuation strategy that was tantamount to every man for himself until it's time to reassemble and collect the checks that will be rolling in.
Along the same lines, John Tierney in this NY Times op-ed suggested the following common sense approach to rebuilding New Orleans:
Here's the bargain I'd offer New Orleans: the feds will spend the billions for your new levees, but then you're on your own. You and others along the coast have to buy flood insurance the same way we all buy fire insurance - from private companies that have more at stake than do Washington bureaucrats.
Private flood insurance has come to seem quaint in America, but in Britain it's the norm. If Americans paid premiums for living in risky areas, they'd think twice about building oceanfront villas. Voters and insurance companies would put pressure on local politicians to take care of the levees, prepare for the worst - and stop waiting for that bumbling white knight from Washington.
September 6, 2005
This NY Times article provides a good summary of the response of the Houston business community to the aftermath of Hurricane Katrina and the business opportunity that it represents. The article focuses on the short term business opportunities, although the more signficant economic impact to the overall Houston economy would be the potential population and job growth that could result from the exodus of New Orleans citizens to Houston. Nevertheless, the article is an interesting read of how Houston businesses are responding to the aftermath of Katrina, so check it out.
Update: Tory Gattis has good insights into the probable long-term economic impact of the hurricane on Houston's economy.
Following on this earlier post and Joe Carter's post noted in the post below regarding the failures of the federal government in the Hurricane Katrina aftermath, former state legislator Bob Williams -- whose district was the most impacted by the Mount St. Helens eruption -- lays the wood to Louisiana Governor Kathleen Blanco and New Orleans Mayor Ray Nagin in this equally devastating Opinion Journal op-ed
The primary responsibility for dealing with emergencies does not belong to the federal government. It belongs to local and state officials who are charged by law with the management of the crucial first response to disasters. First response should be carried out by local and state emergency personnel under the supervision of the state governor and his/her emergency operations center.
The actions and inactions of Gov. Blanco and Mayor Nagin are a national disgrace due to their failure to implement the previously established evacuation plans of the state and city. Gov. Blanco and Mayor Nagin cannot claim that they were surprised by the extent of the damage and the need to evacuate so many people. Detailed written plans were already in place to evacuate more than a million people. The plans projected that 300,000 people would need transportation in the event of a hurricane like Katrina. If the plans had been implemented, thousands of lives would likely have been saved.
In addition to the plans, local, state and federal officials held a simulated hurricane drill 13 months ago, in which widespread flooding supposedly trapped 300,000 people inside New Orleans. The exercise simulated the evacuation of more than a million residents. The problems identified in the simulation apparently were not solved.
A year ago, as Hurricane Ivan approached, New Orleans ordered an evacuation but did not use city or school buses to help people evacuate. As a result many of the poorest citizens were unable to evacuate. Fortunately, the hurricane changed course and did not hit New Orleans, but both Gov. Blanco and Mayor Nagin acknowledged the need for a better evacuation plan. Again, they did not take corrective actions. In 1998, during a threat by Hurricane George, 14,000 people were sent to the Superdome and theft and vandalism were rampant due to inadequate security. Again, these problems were not corrected.
Mayor Nagin was responsible for giving the order for mandatory evacuation and supervising the actual evacuation: His office of Emergency Preparedness (not the federal government) must coordinate with the state on elements of evacuation and assist in directing the transportation of evacuees to staging areas. Mayor Nagin had to be encouraged by the governor to contact the National Hurricane Center before he finally, belatedly, issued the order for mandatory evacuation. And sadly, it apparently took a personal call from the president to urge the governor to order the mandatory evacuation.
The city's evacuation plan states: "The city of New Orleans will utilize all available resources to quickly and safely evacuate threatened areas." But even though the city has enough school and transit buses to evacuate 12,000 citizens per fleet run, the mayor did not use them. To compound the problem, the buses were not moved to high ground and were flooded. The plan also states that "special arrangements will be made to evacuate persons unable to transport themselves or who require specific lifesaving assistance. Additional personnel will be recruited to assist in evacuation procedures as needed." This was not done.
Instead of evacuating the people, the mayor ordered the refugees to the Superdome and Convention Center without adequate security and no provisions for food, water and sanitary conditions. As a result people died, and there was even rape committed, in these facilities. Mayor Nagin failed in his responsibility to provide public safety and to manage the orderly evacuation of the citizens of New Orleans. Now he wants to blame Gov. Blanco and the Federal Emergency Management Agency. In an emergency the first requirement is for the city's emergency center to be linked to the state emergency operations center. This was not done.
The federal government does not have the authority to intervene in a state emergency without the request of a governor. President Bush declared an emergency prior to Katrina hitting New Orleans, so the only action needed for federal assistance was for Gov. Blanco to request the specific type of assistance she needed. She failed to send a timely request for specific aid.
In addition, unlike the governors of New York, Oklahoma and California in past disasters, Gov. Blanco failed to take charge of the situation and ensure that the state emergency operation facility was in constant contact with Mayor Nagin and FEMA. It is likely that thousands of people died because of the failure of Gov. Blanco to implement the state plan, which mentions the possible need to evacuate up to one million people. The plan clearly gives the governor the authority for declaring an emergency, sending in state resources to the disaster area and requesting necessary federal assistance.
Although one whould caution against jumping to conclusions before facts are established, tongues will nevertheless be wagging across the United States today in the face of this devastating Wall Street Journal ($) article that lists the incidents reflecting lack of organization and preparedness in the federal government's response to the aftermath of Hurricane Katrina, including the following:
The U.S. Army has a large facility, Fort Polk, in Leesville, La., about 270 miles northwest of New Orleans. Officials at Fort Polk, which has nearly 8,000 active-duty soldiers, said their contribution so far has consisted of a few dozen soldiers from the 10th Mountain Division manning purification equipment and driving half-ton trucks filled with supplies and equipment. The first contingent of soldiers didn't receive orders until Saturday afternoon.
A spokeswoman at Fort Polk said she did not know why the base received its deployment orders so late in the game. "You'd have to ask the Pentagon," she said. A senior Army official said the service was reluctant to commit the 4th brigade of the 10th Mountain Division from Fort Polk, because the unit, which numbers several thousand soldiers, is in the midst of preparing for an Afghanistan deployment in January.
Instead, the Pentagon chose to send upwards of 7,500 soldiers from the 1st Cavalry Division at Fort Hood, Texas and the 82nd Airborne Division from Fort Bragg, N.C., along with Marines from California and North Carolina. Soldiers from the 82nd Airborne Division are able to deploy anywhere in the world in 18 hours. It took several days for them to arrive on the ground in Louisiana.
And you just knew that airport security had to have a hand in this mess, too:
Because of worries that terrorists could take advantage of such chaos, FEMA now must abide by post-9/11 security procedures, such as putting air marshals on flights. That meant stranded residents couldn't be evacuated from the New Orleans airport until FEMA had rounded up dozens of Transportation Security Administration screeners and more than 50 federal air marshals. Inadequate power prevented officials from firing up X-ray machines and metal detectors until the government decided evacuees could be searched manually.
The article reports that even basic logistical support was unorganized:
In the hours before and after Katrina struck, there weren't firm procedures in place for directing people and materials. Dan Wessel, owner of Cool Express Inc., a Blue River, Wis., transportation company that contracts with FEMA to move supplies, said he didn't get a green light to send trucks to a staging area in Dallas until about 4 p.m. Monday, hours after Katrina made landfall. That was too late to meet a deadline of getting trucks to Dallas by noon Tuesday, he said.
Once the trucks arrived, drivers often found no National Guard troops, FEMA workers or other personnel on hand to help unload the water and ice, Mr. Wessel said. "I almost told the guys to leave, but people are wanting the water," he said. "The drivers distributed it."
There is much more, so read the entire article, as well as Joe Carter's thoughtful piece on how America's current leadership failed in preparing the local leadership necessary to address a disaster of this magnitude.
As noted in this earlier post, "they fiddle while Rome burns . . ." But kidding aside, the apparent failure of the Department of Homeland Security in its first big test in responding to a natural disaster is sure making the decision to create that agency as a massive reshuffling of the deck chairs on the Titanic.
Update: Given the extent of disingenuous statements made by governmental officials, Ellen Podgor in this White Collar Criminal Prof blog post asks the following question:
[O]ne has to wonder if this reaches a level of criminality. And if not, should it?
By the way, don't miss watching this CNN/AOL video that exposes the contrary pre- and post-hurricane statements by Homeland Security chief Michael Chertoff and FEMA director Michael Brown (he of Grilled by Koppel fame). Devastating is too mild a word to describe the piece.
September 5, 2005
The Librarians' Index to the Internet has put together a terrific web resource center for Hurricane Katrina-related information, including information on volunteer opportunities, legal matters, displaced students, charitable giving, animal rescue, missing persons, temporary housing, flood control, levee management, gas prices, environmental factors, news sites, maps and images, and much more. Moreover, LII.org continually updates their webpages, so check back from time-to-time to review the resources added to the Hurricane Katrina webpage.
Man, those librarians sure can organize, eh? ;^)
Awhile back, I participated with local bloggers Tory Gattis, Anne Linehan and Kevin Whited, Laurence Simon, Owen Courr?ges and several others on a lively thread regarding the causes and effect of the public policy choices that Houston is making in regard to Houston's Metropolitan Transit Authority and its light rail system. One of the points that I tried to make in that discussion was the political factors often prompt people who need mass transit the most to vote in favor of transit plans -- such as Houston's light rail system -- that really do not really address their needs, and that such choices often have long-lasting and unintended consequences.
Along those same lines, Randal O'Toole, senior economist at the Thoreau Institute, points out here that the public policy decisions regarding mass transit in New Orleans played a large part in the loss of human life that will result from Hurricane Katrina and the storm's aftermath:
Those who fervently wish for car-free cities should take a closer look at New Orleans. The tragedy of New Orleans isn't primarily due to racism or government incompetence, though both played a role. The real cause is automobility -- or more precisely to the lack of it.
"The white people got out," declared the New York Times today. But, as a chart in the Times article makes clear, the people who got out were those with automobiles. Those who stayed, regardless of color, were those who lacked autos.
What made New Orleans more vulnerable to catastrophe than most U.S. cities is its low rate of auto ownership. According to the 2000 Census, nearly a third of New Orleans households do not own an automobile. This compares to less than 10 percent nationwide. There are significant differences by race: 35 percent of black households but only 15 percent of white households do not own an auto. But in the end, it was auto ownership, not race, that made the difference between safety and disaster.
"The evacuation plan was really based on people driving out," an LSU professor told the Times. On Saturday and Sunday, August 27 and 28, when it appeared likely that Hurricane Katrina would strike New Orleans, those people who could simply got in their cars and drove away. The people who didn't have cars were left behind.
Critics of autos love the term "auto dependent." But Katrina proved that the automobile is a liberator. It is those who don't own autos who are dependent -- dependent on the competence of government officials, dependent on charity, dependent on complex and sometimes uncaring institutions.
As shown in the table below, the number of people killed by hurricanes in the U.S. steadily declined during the twentieth century. Economists commonly attribute such declines to increasing wealth. Wealth differences are also credited with the large number of disaster-related deaths in developing nations vs. developed nations. But what makes wealthier societies less vulnerable to natural disaster? There are several factors, but the most important is mobility.
Number of Deaths Caused by Hurricanes in the U.S.:
Source: Atlantic Oceanographic and Meteorological Laboratory. Number for 1900-1919 is estimated as the exact death toll from 1900 Galveston hurricane is unknown.
People with access to autos can leave an area before it is flooded or hit with hurricanes, tornados, or other storms. When earthquakes or storms strike too suddenly to allow prior evacuation, people with autos can move away from areas that lack food, safe water, or other essentials.
Numerous commentators have legitimately criticized the Federal Emergency Management Agency and other government agencies for failing to foresee the need for evacuation, failing to secure enough buses or other means of evacuation, and failing to get those buses to people who needed evacuation. But people who owned autos didn't need to rely on the competence of government planners to be safe from Katrina and flooding. They were able to save themselves by driving away. Most apparently found refuge with friends or in hotels many miles from the devastation. Meanwhile, those who didn't have autos were forced into high-density, crime-ridden refugee camps such as the Superdome and New Orleans Convention Center.
Rather than help low-income people achieve greater mobility, New Orleans transportation planners decided years ago that their highest priority was to provide heavily subsidized streetcar rides for tourists. In the late 1980s and 1990s, New Orleans spent at least $15 million converting an abandoned rail line into the 1.5-mile Riverfront Streetcar line. In 2004, New Orleans opened the 3.6-mile Canal Street streetcar line at a cost of nearly $150 million.
New Orleans was planning to spend another $120 million on a Desire Street streetcar line.
These tourist lines do nothing to help any local residents except for those who happen to own property along the line. The city was not deterred by table 7.2 on page 8 its own analysis of the Desire line showing that each new rider on this line would cost taxpayers more than $20.
About 26,000 low-income families in New Orleans don't own a car. If all the money spent on New Orleans streetcars from 1985 to the present had been spent instead on helping autoless low-income families achieve mobility, the city would have had more than $6,000 for each such family, enough to buy good used cars for all of them. Add the money the city wanted to spend on the Desire Street streetcar and you have enough to buy a brand-new car for every single autoless low-income family -- not a Lexus or BMW, certainly, but a functional source of transportation that would have allowed them to escape the current disaster.
While I don't think that buying low-income families brand-new cars is the best use of our limited transportation resources, it would produce far greater benefits than building rail transit. Studies have found that unskilled workers who have a car are much more likely to have a job and will earn far more than workers who must depend on transit. That is why numerous social service agencies have begun programs aimed at helping low-income families acquire their first car or maintain an existing one.
Yet when I point out the comparative benefits of providing mobility to low-income people vs. building rail transit lines to suburban areas that already enjoy a high degree of mobility, rail advocates often respond, "We can't let poor people have cars. It would cause too much congestion." Yes, as the Soviet Union discovered, poverty is one way to prevent congestion.
New Orleans is in many ways a model for smart growth: high densities, low rates of auto ownership, investments in rail transit. This proved to be its downfall. While the city was vulnerable from being built below sea level, many cities above sea level have proven equally vulnerable to storms and flooding. In the end, New Orleans' people suffered primarily because so many lived without autos, thus making them overly dependent on the competence of government planners.
As noted in this previous post, people are entitled to vote in favor of a mass transit system that does not really address their needs. However, they should not be misled in doing so as has often been the case with regard to past Metro referendums. If a part of Metro's long-term strategy is to make certain segments of Houston's population less "automobile-dependent," then one of the lessons of New Orleans and Hurricane Katrina is that we should make clear in any future Metro referendums that such a strategy can have deadly consequences in the event that an evacuation of Houston is required.
Hat tip to Peter Gordon for the link to Mr. O'Toole's piece.
It's not everyone who can make this type of contribution to the Hurricane Katrina relief effort:
Greg Norman is lending his personal helicopter to the Hurricane Katrina relief effort, just as he did after last year's destructive hurricane season.
Norman sent the helicopter to the greater Louisiana area Friday, and said it will remain in service for as long as a month. His pilot, Gary Hogan, will fly medical supplies and other items into the region.
"Our thoughts and feelings go out to everyone over there," Norman said.
Norman's estate on Jupiter Island, about 90 miles north of Miami, was damaged by hurricanes Frances and Jeanne last year. He lent his helicopter - which can carry about 1,000 pounds of supplies and shuttle small groups of patients and medics - to the recovery effort.
The Federal Emergency Management Agency contacted the helicopter's manufacturer in recent days seeking help, and word eventually got to Norman. FEMA will coordinate Hogan's flights and supply fuel.
"They need as much airlift as they can get," Norman said.
September 4, 2005
As noted here earlier, I don't think it's the time to point fingers at each other while there are still people to be saved inside New Orleans, although I do think the question of why troops were not used earlier to re-establish civil order is a reasonable one.
However, among the early analysis of what went wrong with the various governmental responses to the aftermath of Hurricane Katrina, this Washington Post article makes it clear that the Bush Administration is not going to take all the blame for various shortcomings:
Behind the scenes, a power struggle emerged, as federal officials tried to wrest authority from Louisiana Gov. Kathleen Babineaux Blanco (D). Shortly before midnight Friday, the Bush administration sent her a proposed legal memorandum asking her to request a federal takeover of the evacuation of New Orleans, a source within the state's emergency operations center said Saturday.
The administration sought unified control over all local police and state National Guard units reporting to the governor. Louisiana officials rejected the request after talks throughout the night, concerned that such a move would be comparable to a federal declaration of martial law. Some officials in the state suspected a political motive behind the request. "Quite frankly, if they'd been able to pull off taking it away from the locals, they then could have blamed everything on the locals," said the source, who does not have the authority to speak publicly.
A senior administration official said that Bush has clear legal authority to federalize National Guard units to quell civil disturbances under the Insurrection Act and will continue to try to unify the chains of command that are split among the president, the Louisiana governor and the New Orleans mayor.
As one my former professors used to remind me, "they fiddle while Rome burns and, to make matters worse, they do not realize that Rome is burning or that they are fiddling."
As Americans are still attempting to absorb the shock of the largest exodus of citizens during our nation's modern history, the Chronicle's Steve Campbell's great photo of the inside of Houston's Astrodome provides the backdrop to a huge part of the Hurricane Katrina relief effort that you do not see on television -- the massive effort by a network of Houston-area churches and charities to provide relief resources to the tens of thousands of Gulf Coast evacuees who are residing in hotels and homes throughout Houston and Texas.
Although the evacuees from New Orleans are understandably getting most of the attention from the mainstream media, hotels and shelters from the Texas-Louisiana border to throughout the Houston-Dallas-San Antonio triangle are filled with tens of thousands of other Gulf Coast evacuees. The largest concentration of evacuees in Texas remains at Reliant Park in Houston, where about 25,000 people are currently located and, as of Sunday, another 7,200 will be located at the George R. Brown Convention Center in downtown Houston. In addition to those evacuees, an estimated 170,000 other people from Louisiana and Mississippi are staying with friends or relatives, or in hotels in the Houston area. A spokesman for Houston's hotel owner's association estimates that about 45,000 of the Houston area's 55,000 hotel rooms are occupied by Gulf Coast evacuees.
As a result of the surge of evacuees, city and county officials shifted gears on Saturday and turned Reliant Park into a medical way station where newly arriving evacuees are assessed as to their medical needs. The injured or sick are taken off to either the onsite medical facility or the nearby Texas Medical Center, and then the healthy are given a meal and transferred to new shelters being opened in Huntsville, Corpus Christi and Lubbock. On Saturday, at the Reliant Park medical clinic, about a 1,000 volunteer doctors, nurses and other medical personnel treated 3,500 evacuees and sent about 100 of those to area hospitals. Doctors gave about 2,000 tetanus shots to people who were injured during their ordeal in the hurricane and its aftermath.
Meanwhile, Houston-area churches and charities continued organizing a massive relief effort on behalf of both the evacuees at the main shelters and others outside those shelters. A group of Houston churches raised about $4 million for a month's worth of meals at Reliant Park and the Brown Convention Center and to provide volunteer servers for those meals. Either a large church or several churches will be handling service of those meals each day over the next couple of months, and members of my family and I will be serving meals on Tuesday, September 20 as my family's church handles the food service operation on that day.
In addition to those efforts at the main shelters, the network of churches and local charities are also setting up the infrastructure necessary to provide relief to the tens of thousands of evacuees who are located around the Houston area outside of the main shelters at Reliant Park and the Brown Convention Center. Representative of that overall effort are the services being provided by my family's church in the South Montgomery County area of Houston, where our church is providing relief services to evacuees in three local hotels. Literally hundreds of other Houston-area churches and charities are providing similar services, including Second Baptist Church, First United Methodist in downtown Houston, Fellowship of The Woodlands, Chapelwood United Methodist, Lakewood Church, St. Luke's United Methodist, Windsor Village United Methodist, Christ United Methodist Church, the Catholic Churches of the Houston-Galveston Archdiocese and the remarkable Houston Food Bank. If you are not affiliated with a church or charity that is involved in this effort, Charles Kuffner provides this informative post on information on how to get involved.
So, although the relief effort that is going on at Reliant Park and the Brown Convention Center is certainly important and compelling, it is equally important to recognize that there is an even bigger relief effort ongoing at the same time that addresses the needs of over a hundred thousand people who are not at the more visible shelters. That this massive relief effort has been put together literally behind the scenes in less than five days is yet another reason why Houston is one remarkable place.
Six days after Hurricane Katrina hammered a main conduit of the U.S. energy and shipping industries, much of the crucial infrastructure on the energy industry in the Gulf Coast region those remains shut down. Although a full assessment of the status of the region's infrastructure still cannot be made because of the post-storm chaos, it is becoming increasingly clear that refining and production capacity in the region will be curtailed for a prolonged period of time. Earlier posts on the developing economic effects of Katrina over the past week are here, here, here, here, here and here.
First, the impact on refining capacity. The storm shut down about two million barrels a day of crude-oil refining capacity. That translates to the loss of about one million barrels a day of gasoline production, which is about 10% of total U.S. demand. It is now apparent that at least four refineries that together generate about 5% of U.S. oil-refining capacity will be down for at least a month as those facilities are repaired. Meanwhile, damage to production capacity has also been extensive. Although production is coming back on-line slowly, it's becoming clearer that it will take at least several weeks -- and perhaps months -- for production levels to return to near pre-Katrina levels.
As noted here, the International Energy Agency ordered the release of two million barrels a day of crude oil, gasoline and other fuels on to the world market from their strategic stockpiles over the next month and, in response, gasoline and crude-oil futures fell on the Nymex Exchange for the first time since the storm. But the IEA's move refects that the world is now running partly on its fuel reserves that have been set aside for emergency use. Inasmuch as the amount of spare production capacity on the world market is particularly thin at this time, any further blips on the energy supply or demand radar screens would have even greater economic impact than those we are already experiencing.
Similarly, the news on the production side of the energy industry is not particularly optimistic, either. Six days into the recovery from Katrina, energy producers have been able to restart about 250,000 barrels a day of oil and 3 billion cubic feet of daily gas production that had shut down in anticipation of the storm. In comparison, six days after the smaller Hurricane Ivan last year, energy producers had restarted almost 850,000 barrels a day of oil and 4.1 billion cubic feet of natural gas. In addition to the extensive damage to offshore drilling and production facilities, roads and waterways, a big reason for the slow recovery is a practical problem -- the service companies that provide transportation and equipment for damage assessment and repair along the Gulf Coast are also in a state of chaos. Many of those companies' employees are homeless and living temporarily elsewhere, complicating the damage assessment process greatly. As a result, concrete information on the status of offshore production facilities and pipelines remains sketchy, at best.
Finally, at least indirectly tied to the dislocation of gasoline supplies resulting from Hurricane Katrina, don't miss James Hamilton's witty analysis of California Attorney General and demagouge Bill Lockyer's incredibly disingenuous plan to keep California gasoline prices low.
September 3, 2005
In the chaos of the worst natural disaster of our time, the remarkable Houston community provided extraordinary relief for tens of thousands of New Orleans area evacuees and, in so doing, provided a substantial part of the calming effect that steadied jittery economic markets still attempting to stabilize from the effects of Hurricane Katrina.
First, the economic update. As the evacuation of New Orleans picked up steam on Friday, crude-oil and gasoline futures fell sharply as the federal government and the International Energy Agency arranged to release almost 2 million of barrels of oil daily to cover shortages caused by Hurricane Katrina. The short-term supply relief drove benchmark light, sweet crude oil October futures contracts down nearly $2 to $67.57 a barrel on the Nymex Exchange. Earlier posts on the developing economic effects of Katrina over the past week are here, here, here, here and here.
In addition to the drop in crude futures, Nymex gasoline futures for October fell 22.53 cents to finish at $2.1837 a gallon and the October contracts fell another 23 cents in overnight trading to end at $2.2295 a gallon. Also, Nymex heating oil futures for October traded down 10.74 cents to $2.0911 a gallon.
As noted in this post yesterday, both the Louisiana Offshore Oil Port -- a key Gulf port for oil supertankers -- and the huge Plantation Pipe Line -- which transports fuel to much of the Southeast -- regained power late Thursday and were resuming operations. Moreover, some other fuel pipelines began restarting operations Friday, although supplies of product are way down after the storm knocked out nine Gulf Coast refineries, disrupted gasoline pipelines, and shut down 90% of the oil production and about 80% of natural gas production in the Gulf of Mexico. The Gulf region generates about 30% of U.S. oil production and about 25% of its natural gas production.
On the downside, additional information on damage to offshore oil and gas rigs in the Gulf of Mexico continued to filter in to the markets. The American Petroleum Institute announced that the storm had damaged or displaced about 60 Gulf oil platforms and drilling rigs, and about 30 of those are total losses. A company breakdown on the ownership of the lost rigs and platforms is not yet available. James Hamilton has his usual insightful thoughts on what all this may mean for the overall economy going forward.
Meanwhile, Houston continued to exhibit the remarkable nature that has made this city a comfortable home for my family and me over the past 33 years as city and county officials essentially opened the huge Reliant Park Convention and Sports Complex as massive shelters for an estimated 30,000 evacuees from New Orleans. Officials currently estimate that another 70,000 Gulf Coast area evacuees are staying in the Houston area with relatives or friends, in hotels, or in smaller shelters. The vast majority of these people need financial assistance, and many need medical care. The Houston Chronicle is providing excellent coverage of the situation, as are many Houston-area bloggers, a good number of which are listed in this post of Chronicle business blogger Loren Steffy. BlogHouston.net, the Lone Star Times,Off the Kuff, Eric Berger and many other local blogs have also been providing outstanding coverage of the Houston relief effort.
As bad as this disaster has been, it is difficult to imagine how bad it would have been had Houston's amazing facilities not been available as a transition point for the Gulf Coast region evacuees. Reliant Park is a massive facility that can accomodate huge numbers of people, and it is located near one of the world's finest medical centers, Houston's Texas Medical Center. As large as the loss of life has been in the Gulf Coast region to date, it would have been far larger had Houston's amazing facilities not been available to accomodate the stream of evacuees.
Within Reliant Park, the Astrodome is filled with approximately 15,000 people, while officials have opened up the the adjacent Reliant Arena and the Reliant Park Convention Center to accomodate another 15,000 evacuees. On Friday, city officials also opened the massive George R. Brown Convention Center near downtown Houston, which was filled with air mattresses donated by a local sporting goods retailer. As many as 7,000 people could be staying there as of today.
The flow of buses to Houston continued unabated as conditions in Louisiana have worsened. Rather than turn evacuees away, Houston has simply opened up more of its resources to attempt to accomodate them all, and without much assistance from officials who coordinating the exodus from New Orleans. Texas officials have not been able to coordinate the departures or destinations of the buses with Louisiana counterparts and, at this point, Texas officials have no control over what happens with regard to the exodus from New Orleans.
At this point, Houston officials are using the Astrodome as a staging area for newly arriving buses and their passengers. Medical and security personnel greet each bus after it arrives and pre-screen passengers during the six mile trip to the George R. Brown Convention Center. Meanwhile, Texas Medical Center hospitals equipped and staffed a medical clinic at the Brown Center to handle the larger number of elderly and ill arrivals, and a group of Houston churches are organizing to raise about $4 million for a month's worth of meals and to provide training for volunteer servers at Reliant Park and the Brown Center.
Folks, this is going to be one wild ride. Stay tuned.
Following on this previous post about the Fifth Circuit Court of Appeals emergency operations, Chief Judge Carolyn Dineen King announced on Friday that the Court would temporarily relocate to Houston. The court will resume operations in Houston in the Federal Courthouse at 515 Rusk Avenue in downtown Houston (View image) on September 14, and the current plan is to remain here for at least two months before eventually moving to temporarly quarters in Baton Rouge, La. Given the situation in New Orleans, the timing of a return to the Court's permanent offices there is problematic at this point.
Most of the Fifth Circuit's documents are digitized and backed up electronically on remote servers, so the Court's operations should be able to get back up to speed quickly. Most of the Court's paper documents were moved from the first floor to the second floor of its New Orleans courthouse before the storm, but the status of those files is still undetermined at this time.
September 2, 2005
Late night television viewers are still shaking their heads over ABC Nightline's Ted Koppel's interview last night of Mike Brown, embattled director of the Federal Emergency Management Agency (FEMA). Here is a partial transcript of the interview, a portion of which went like this:
Koppel: You have chaos and anarchy breaking out in a number of different places in New Orleans, it would seem the first thing is to get good solid combat troops like the 82nd airborne or 101st in there. These are guys who are ready to move immediately. Instead you send National Guardsmen and it's taking time. You don't have time.
Brown: [T]here will soon be 30,000 armed National Guard troops in there to restore order, to take control of the facilities and allow us to do our job.
Koppel: Mr. Brown, you know, forgive me . . . But here we are, essentially five days after the storm hit, and you are talking about what's going to happen in the next couple of days.
It didn't get any better for Mr. Brown. Read the entire piece here.
Update: Stephen Bainbridge is asking the same question as Mr. Koppel.
My sense is that this is not the time to be blathering about who to blame for what has happened in New Orleans and the governmental response to it. The logistical complications alone of obtaining and organizing the resources necessary to evacuate hundreds of thousands of people under flooded and destroyed conditions are not understood by many of the folks who are criticizing those who are attempting to coordinate that task. So, I prefer to focus on that effort and the heroes who are arising amid the squalor.
One of those is Dr. Steve Phillip, who wrote the following email this past Tuesday afternoon from downtown New Orleans:
Thanks to all of you who have sent your notes of concern and your prayers. I am writing this note on Tuesday at 2 p.m. I wanted to update all of you as to the situation here. I don't know how much information you are getting but I am certain it is more than we are getting. Be advised that almost everything I am telling you is from direct observation or rumor from reasonable sources. They are allowing limited internet access, so I hope to send this dispatch today.
Personally, my family and I are fine. My family is safe in Jackson, Miss., and I am now a temporary resident of the Ritz Carlton Hotel in New Orleans. I figured if it was my time to go, I wanted to go in a place with a good wine list. In addition, this hotel is in a very old building on Canal Street that could and did sustain little damage. Many of the other hotels sustained significant loss of windows, and we expect that many of the guests may be evacuated here.
Things were obviously bad yesterday, but they are much worse today. Overnight the water arrived. Now Canal Street (true to its origins) is indeed a canal. The first floor of all downtown buildings is underwater. I have heard that Charity Hospital and Tulane are limited in their ability to care for patients because of water. Ochsner is the only hospital that remains fully functional. However, I spoke with them today and they too are on generator and losing food and water fast.
The city now has no clean water, no sewerage system, no electricity, and no real communications. Bodies are still being recovered floating in the floods. We are worried about a cholera epidemic. Even the police are without effective communications. We have a group of armed police here with us at the hotel that is admirably trying to exert some local law enforcement. This is tough because looting is now rampant. Most of it is not malicious looting. These are poor and desperate people with no housing and no medical care and no food or water trying to take care of themselves and their families. Unfortunately, the people are armed and dangerous. We hear gunshots frequently. Most of Canal Street is occupied by armed looters who have a low threshold for discharging their weapons. We hear gunshots frequently. The looters are using makeshift boats made of pieces of Styrofoam to access. We are still waiting for a significant National Guard presence.
The health care situation here has dramatically worsened overnight. Many people in the hotel are elderly and small children. Many other guests have unusual diseases. .... There are (Infectious Disease) physicians in at this hotel attending an HIV confection. We have commandeered the world famous French Quarter Bar to turn into a makeshift clinic. There is a team of about seven doctors and PAs and pharmacists. We anticipate that this will be the major medical facility in the central business district and French Quarter.
Our biggest adventure today was raiding the Walgreen's on Canal under police escort. The pharmacy was dark and full of water. We basically scooped the entire drug sets into garbage bags and removed them. All under police escort. The looters had to be held back at gunpoint. After a dose of prophylactic Cipro I hope to be fine.
In all we are faring well. We have set up a hospital in the French Quarter bar in the hotel, and will start admitting patients today. Many will be from the hotel, but many will not. We are anticipating dealing with multiple medical problems, medications and acute injuries. Infection and perhaps even cholera are anticipated major problems. Food and water shortages are imminent.
The biggest question to all of us is "where is the National Guard?" We hear jet fighters and helicopters, but no real armed presence, and hence the rampant looting. There is no Red Cross and no Salvation Army.
In a sort of cliché way, this is an edifying experience. One is rapidly focused away from the transient and material to the bare necessities of life. It has been challenging to me to learn how to be a primary care physician. We are under martial law so return to our homes is impossible. I don't know how long it will be and this is my greatest fear. Despite it all, this is a soul-edifying experience. The greatest pain is to think about the loss. And how long the rebuild will take? And the horror of so many dead people ..
PLEASE SEND THIS DISPATCH TO ALL YOU THING MAY BE INTERESTED IN A DISPATCH from the front. I will send more according to your interest. Hopefully their collective prayers will be answered. By the way, suture packs, sterile gloves and stethoscopes will be needed as the Ritz turns into a MASH.
As state and federal officials grappled with the massive human toll that Hurricane Katrina exacted on the Gulf Coast region, further assessment of the damage is indicating that the storm has wreaked havoc to key business properties along the Gulf Coast.
In positive developments, crude-oil prices eased early Friday morning in electronic trading and gasoline futures fell for the first time this week as several energy facilities on the Gulf Coast started up again for the first time. The front-month October contract on the Nymex Exchange fell 42 cents to $69.05 a barrel after rising 53 cents during trading on Thursday. However, crude oil contracts for November through February -- traditionally high-demand months because of heating oil demand -- were all trading above $70 a barrel amid worries that the storm had wiped out key refining capacity.
Eight major Gulf Coast refineries are still shut down and it is becoming increasingly apparent that at least several of those will require a month or more to restart. Moreover, early speculation is that there has also been significant damage to offshore infrastructure -- i.e., pipelines, gathering hubs and production platforms -- that could take several months to repair. Less than 20% of energy production within the Gulf of Mexico -- which produces about a quarter of U.S. production -- had been restored yesterday. In comparison, four days after the less powerful Hurricane Ivan storm last year, 60% of such production had been restarted.
Still, some good news was trickling in. Valero Energy Corp. announced that it had restored power to its refinery in St. Charles, La. and Marathon Oil Co. announced that its refinery in Garyville could be producing gasoline by next week. In addition, Houston-based Kinder Morgan Energy Partners LP announced that its Plantation Pipe Line Co. had resumed service at about 25% of capacity on Wednesday.
Whether a true energy crisis emerges from this natural disaster depends on how quickly the production and refining infrastructure in the Gulf Coast region is repaired, how well the oil and gas industry handles re-distribution of products to the various U.S. regions in the interim and whether there is a "run on the pumps" by the public as a result of a perceived shortage of fuel. Last year, Hurricane Ivan damaged key offshore pipeline infrastructure, which dampened production for several months and eventually was a key factor in an increase in crude oil from $44 to above $50 over a two month period.
What makes this energy crunch different from past ones is that it has been caused by damage to entire region's integrated supply system. Unlike the energy crises of the 1970s or the run-up after Iraq's invasion of Kuwait in 1990-91 that were based on constrained oil production, this situation involves natural gas, refineries and electricity. As Daniel Yergin points out today in the Wall Street Journal ($), the oil production that has been shut-in to date is far less than the markets lost when Iraq invaded Kuwait in 1990:
However, 16% of U.S. natural gas has been shut-in and 10% of U.S. refining capacity is under water at a time when there is no slack at all in the world's refining system. The electric and natural gas distribution system in the region has also been knocked out. All of this has a knock-on effect: Boats can't get out to the platforms without diesel fuel; and refineries can't operate without electricity or people. . . . With communications broken down, companies are still trying to make contact with the missing employees who run the different parts of the energy infrastructure. As for electricity, a frontline manager summed up the problem: "You can't overemphasize the absolute enormity of the undertaking to put this place back together again."
Meanwhile, concerns are also increasing about damage to the critical Mississippi River shipping corridor south of New Orleans that allows deep-water ships to access the Port of New Orleans. Photographs and first-hand accounts from helicopter pilots, boat captains and engineers indicate that the main channel of the river remains intact, but that the surrounding nub of land around the last 20 miles of the river -- knowns as the "Crow's Foot" -- was heavily damaged with about 100 barges and other vessels sunk or grounded in the river. The long-term navigability of the lower Mississippi and its main entryway for large ocean-going vessels -- the 45 foot deep channel known as the "Southwest Pass" -- is still undetermined and probably will not be known for at least several more days. And if things needed to get any more complicated than they already are, the media is reporting that a major oil spill near Venice at the southern tip of Louisiana near the mouth of the Mississippi River is a "potential environmental hazard."
The Southwest Pass is extremely important to the economy of the region and other parts of the U.S. because it is the conduit for thousands of large ships that bring goods into the vast complex of docks, shipping terminals, grain-loading facilities and petroleum-processing plants that line the banks of the Mississippi between New Orleans and Baton Rouge. This massive shipping area is one of the busiest in the U.S. and coordinates the flow of much imported petroleum, export grain and huge amounts of other types of cargo such as from coal, rubber, steel, and chemicals.
Inasmuch as about 60% of U.S. grain exports go through New Orleans, wheat futures for September delivery have fallen almost 2% this week at the Chicago Board of Trade. Similarly, New Orleans is a main port for coffee imports, so coffee futures for December delivery have jumped nearly 10%. The loss of coffee imports sitting in the New Orleans port warehouses at the time of the storm could be the equivalent of a major frost in South American coffee-producing regions.
Finally, given the other emergencies, almost no analysis has been performed to date on the impact of the storm on the Gulf Coast region's small businesses, which, in the aggregate, are the largest employer in the region. Virtually all of those businesses have been wiped out. Given the large exodus of people from the area resulting from the uninhabitable conditions, most of those businesses -- most of which are service-oriented -- will not be revived. Thus, those jobs simply will not be available for residents of the area for quite some time, adding another formidable obstacle to rebuilding the devastated Gulf Coast region.
September 1, 2005
Be sure to check out blogHouston.net where Anne Linehan and Kevin Whited are doing an excellent job of chronicling the local resources in support of Houston's extraordinary Hurricane Katrina relief effort. Anne and Kevin have several posts relating to the relief effort, and they will be adding additional ones over the next several days. Check out their site periodically for updates. A great organization job by two of Houston's best bloggers.
Update: Local blog The Lone Star Times is liveblogging from the Astrodome, providing a fascinating resource for keeping up with the unfolding developments within the largest refugee camp to be established on U.S. soil in many, many years. The Chronicle has also started up the Domeblog that is providing periodic updates from the Astrodome.
The following description of downtown New Orleans was posted about an hour ago from the Interdictor blog, the author of which is securing a building in downtown New Orleans. The description sounds as if it is coming straight out of a scene from The Road Warrior:
"Situation is critical.
I'm not leaving, so stop asking. I'm staying. I am staying until this shitstorm has blown itself out. Period. End of discussion.
Now for some updates:
1. Been too busy to debrief the police officer, so that will come later. Low priority now.
2. Buses loading people up on Camp Street to take refugees to Dallas, or so the word on the street (literally) is.
3. Dead bodies everywhere: convention center, down camp street, all over.
4. National Guard shoving water off the backs of trucks. They're just pushing it off without stopping, people don't even know it's there at first -- they drop it on the side in debris, there's no sign or distribution point -- people are scared to go near it at first, because the drop points are guarded by troops or federal agents with assault rifles who don't let people come near them, which scares people off. It is a mess. When people actually get to the water, they are in such a rush to get it that one family left their small child behind and forget about him until Sig carried him back to the family.
It's raining now and I guess that's a relief from the heat. It's hot as hell down there in the sun. Crime is absolutely rampant: rapes, murders, rape-murder combinations.
I have really cut back answering IMs. Not enough time. I apologize people.
In case anyone in national security is reading this, get the word to President Bush that we need the military in here NOW. The Active Duty Armed Forces. Mr. President, we are losing this city. I don't care what you're hearing on the news. The city is being lost. It is the law of the jungle down here. The command and control structure here is barely functioning. I'm not sure it's anyone's fault -- I'm not sure it could be any other way at this point. We need the kind of logistical support and infrastructure only the Active Duty military can provide. The hospitals are in dire straights. The police barely have any capabilities at this point. The National Guard is doing their best, but the situation is not being contained. I'm here to help in anyway I can, but my capabilities are limited and dropping. Please get the military here to maintain order before this city is lost.
Doing what we can, this is Outpost Crystal getting back to work."
In another development, CNN is reporting that the town of Waveland, Mississippi -- a town of 7,000 thirty-five miles east of New Orleans -- has been destroyed completely. The CNN story includes a grim video that indicates that there was a huge -- but still undetermined at this point -- loss of life in Waveland during the storm.
Update: The Chronicle's Eric Berger passes along this daunting description of the conditions in New Orleans from Dr. Richard Bradley, a professor at both the University of Texas Houston Medical School and Baylor College of Medicine, who is assigned to the elite Texas Task Force One Urban Search and Rescue team that was deployed to the News Orleans disaster area on the evening of Saturday, Aug. 27, a day before the hurricane hit the area.
As the effects of the worst natural disaster of our time continued to become more apparent with each passing hour, Houston opened its arms to tens of thousands of New Orleans citizens who lost virtually everything but their lives.
Houston's venerable Astrodome -- the subject of a local debate over what to do with aging landmark -- was prepared yesterday to receive as many as 25,000 evacuees from New Orleans, many of whom have spent the past five days inside the deteriorating Louisiana Superdome in downtown New Orleans. The evacuees are expected to begin heading for Houston this morning in a caravan of almost 500 buses provided by the Federal Emergency Management Agency. As if to underscore the desperation of the situation, two of the three first buses to reach the Astrodome from New Orleans early this morning were "renegade" buses that did not contain evacuees from the Superdome. The Astrodome went ahead and took in the evacuees from all the buses, anyway. This earlier post provides links to blogs that provide up-to-the minute updates on the situation in New Orleans and the Gulf Coast.
Unfortunately, the chaos in New Orleans has delayed the evacuation of the Superdome on Thursday morning. The Associated Press is reporting the following as of 7:15 a.m.:
The evacuation of the Superdome was suspended Thursday after shots were fired at a military helicopter, an ambulance official overseeing the operation said. No immediate injuries were reported.
"We have suspended operations until they gain control of the Superdome," said Richard Zeuschlag, head of Acadian Ambulance, which was handling the evacuation of sick and injured people from the Superdome.
He said that military would not fly out of the Superdome either because of the gunfire and that the National Guard told him that it was sending 100 military police officers to gain control.
"That's not enough," Zeuschlag. "We need a thousand."
In the meantime, the Astrodome continues to be equipped with 30,000 cots and blankets and outfitted with a medical clinic and food service dispensing three meals a day. The Red Cross and City officials announced that they expect to provide temporary shelter for at least a month at the Astrodome, then begin moving Louisiana residents to shelters closer to their homes. Meanwhile, Houston Mayor Bill White and County Judge Robert Eckels huddled with representatives of Houston area apartment owners to determine how many of Houston's currently large surplus of vacant apartment units could be mobolized to house some of the evacuees. On Wednesday evening, Mayor White did an excellent job representing Houston on CNN, and Judge Eckels on Fox News also conveyed a sense of competent and no-nonsense leadership in the wake of the daunting logistics of preparing for the influx of evacuees.
Elsewhere, evacuees streamed into the dozen local Red Cross shelters that have been set up to receive evacuees from the Gulf Coast disaster area. You can donate through Amazon to the Gulf Coast relief effort through this link, which has also been added to the right column of this blog. Also, Glenn Reynolds has compiled this handy list of direct links to various charities participating in the relief effort. Finally, Kevin Whited over at blogHouston.net provides this list of links to local Houston charities assisting in the relief effort.
In another development, Houston will also open its schools to all displaced Louisiana children. Mayor White stated that "we need to do some planning and thinking on what we do with people out of their houses for a very extended period of time. We have a plan for what we will do for 14 weeks. After that it is unclear." Other Texas cities are also pitching in on the relief effort. The first Hurricane Katrina refugees arrived Wednesday afternoon at the newly opened Reunion Arena in Dallas, and the Red Cross in Dallas had opened two smaller shelters to house about 400 people.
As all of this was going on locally, national and international markets continue to grapple with the potential long-term economic effects of this natural disaster. Although devastating hurricanes such as Andrew in 1992 and the 1994 Los Angeles Northridge earthquake have had a temporary impact on the huge U.S. economy, Katrina could be different. The large scale destruction of several Gulf Coast cities -- including one of almost a half million residents -- is not something that the United States has had to face since the early part of the 20th century. This NY Times schematic provides an excellent guide to the destruction in the New Orleans area.
On a related note, this Wall Street Journal ($) op-ed by urban expert Joel Kotkin points out that the character of New Orleans had changed even before Hurricane Katrina, and that the damage from the storm may be the impetus for either good or bad with regard to the city's future:
In 1920, New Orleans' population was nearly three times that of Houston and nine times Miami's. It was the primary southern destination for European and Caribbean immigrants. Now, both the Houston and Miami areas -- despite their own ample experience with disasters of the natural as well as the manmade variety -- have long ago surpassed New Orleans, with populations more than three times larger. During the '90s, the Miami and Houston areas grew almost six times faster than greater New Orleans, and flourished as major destinations for immigrants, particularly from Latin America.
These newcomers have helped transform Miami and Houston into primary centers for trade, investment and services, from finance and accounting to medical care, for the entire Caribbean basin. They have started businesses, staffed factories, and become players in civic life. Houston has taken over completely as the dominant center for the energy industry, once a key high-wage employer in the New Orleans region.
Instead of serving as a major commercial and entrepreneurial center, New Orleans' dominant industry lies not in creating its future but selling its past, much of which now sits underwater. Tourism defines contemporary New Orleans' economy more than its still-large port, or its remaining industry, or its energy production. Although there is nothing wrong, per se, in being a tourist town, it is not an industry that attracts high-wage jobs; and tends to create a highly bifurcated social structure. This can be seen in New Orleans' perennially high rates of underemployment, crime and poverty. The murder rate is 10 times the national average.
Tyler Cowen over at Martinal Revolution has further thoughts on New Orleans' ability to rebound from this disaster, and this Washington Post article provides a good summary of the practical obstacles that confront New Orleans' recovery.
As noted in these earlier posts, Katrina has already interfered with production of oil and natural gas in the Gulf of Mexico and oil refining along the coast, resulting in rapidly increasing oil and gasoline prices. In addition, the storm has shut down important ports that carry oil, grain and other goods in and out of the U.S. In comparison, even though Hurricane Andrew was an extremely destructive storm, it really had a rather negligible effect on America's economy. The different with Katrina is that it has potentially damaged the ports and refinery system for a large segment of America.
Unfortunately, many of the key economic questions remain unanswerable as the aftermath of Katrina continues to be assessed. The damage to the refineries in the New Orleans area is still being evaluated, so it is still unclear how long it will take to get those plants back on line. Although much of the cargo originally destined for the port of New Orleans has been diverted to the Port of Houston, it remains unclear how that diversion will impact the timing of the distribution of such cargo to the Gulf Coast region.
Financial columnist David Wessel of the Wall Street Journal ($) analyzed the short-term economic cases in the following manner:
The best-case scenario, . . . is that oil, natural gas and gasoline supply are cut by only about 5% for several weeks. Oil prices rise to $75 a barrel, and then slip back to the low $60s. Gasoline prices go above $3 for a couple months and then fall back to $2.50 by year's end. That would shave economic growth by between half a percentage point and one full point later this year.
The worst case is that energy supply is reduced twice as much, and oil prices soar to $100 before sliding back to $70 by year's end and gasoline prices average -- ouch! -- between $3 and $3.50 a gallon for four to six months. That would cut GDP growth by as much as three percentage points, and bring the economy dangerously close to recession by year's end.
Benchmark crude-oil futures on the Nymex Exchange traded at more than $70 a barrel intraday on Wednesday before closing at $68.94, down 87 cents from Tuesday. On futures markets, the gasoline price jumped 17.55 cents to $2.65 a gallon on Wednesday, and since retail prices tend to be about 65 cents higher than wholesale, many experts are now predicting that the U.S. will be dealing with $3-plus-a-gallon gasoline for the next several months (James Hamilton has further thoughts on the potential shortage of gasoline). Meanwhile, heating oil for September delivery fell 2.29 cents to settle at $2.053 in Nymex trading yesterday, while natural gas for October delivery was down 18.7 cents at $11.472 per million British thermal units. Nevertheless, heating oil is up 12% over the last three days and natural gas has risen 17% over the same period.
Reflecting the disruption in supply distribution resulting from Katrina, the Petroleum Traders Corp. of Indiana -- one of the largest independent U.S. distributors of wholesale gasoline -- announced that BP PLC had been forced to cut off gasoline supplies, while earlier in the day, majors Exxon Mobil Corp. and Royal Dutch Shell PLC cautioned that there could be supply disruptions over the next several weeks.
Meanwhile, trading in public companies with a large Gulf Coast presence relected the uncertainty of the situation. Put buyers were active yesterday in regard to credit-card issuer Capital One Financial Corp. over speculation that Hurricane Katrina could delay the closing of the company's purchase of New Orleans-based Hibernia Corp. In unfortunate timing, that transaction is scheduled to close today. Hibernia stock fell $1.97 yesterday (5.8%) to $31.75 on the New York Stock Exchange.
Large hospital chains with operations in the New Orleans area are also feeling the uncertainty of the markets. Option traders were active yesterday in the short-term options on LifePoint Hospitals Inc., which owns the River Parishes Hospital near Lake Pontchartrain, although LifePoint stock rose 65 cents to $45.48 in active trading volume at the Nasdaq Stock Market. Similarly, puts on Ameristar Casinos Inc., which has several Gulf Coast casinos, were also active in tradiny yesterday, although the stock price was off by only 39 cents to $22.97 on the Nasdaq exchange.
Finally, this Wall Street Journal ($) article compares the Hurricane Katrina disaster to the past U.S. disasters of the great 1871 Chicago fire, the 1906 San Francisco earthquake, the 1900 Galveston hurricane, and the 1889 Johnstown flood. Perhaps the most telling observation about this disaster that can be made at this point is that one thing is clear -- regardless of whether it is worse than any of those earlier disasters, it is definitely in the same class of magnitude.
August 31, 2005
As companies involved in the U.S. oil and gas industry continue to assess the damage that Hurricane Katrina has caused to Gulf of Mexico and Gulf Coast production facilities, Royal Dutch Shell PLC announced on Tuesday that its Mars floating production platform, which generates about 220,000 barrels of oil and 220 million cubic feet of natural gas daily, has sustained significant damage, as reflected by the picture on the left. It appears that the platform's above-water module has overturned as a result of the storm. Here are the previous posts over the past several days on Hurricane Katrina.
Meanwhile, initial damage assessments from the hurricane sent oil and gasoline futures prices sharply higher as the storm appears to have knocked out about 10% of U.S. refining capacity for what could be an extended period of time. Katrina has flooded the areas around several major refineries and possibly the refineries themselves, so even when crude-oil production in the Gulf of Mexico is restored, converting that oil into gasoline and other products requires refineries that may not be online for quite some time. Eight major U.S. refineries in the Gulf Coast that produce gasoline, heating oil and other products for distribution across the Southeast and the East Coast remain closed as damage assessments continue.
In anticipation of the storm, producers in the Gulf shut down wells that produce 1.4 million barrels a day. To put that in perspective, that level of production is comparable to the excess pumping capacity of OPEC. However, most of OPEC's excess capacity is in Saudi Arabia, so it takes over a month to import that oil and many U.S. refineries cannot process the high-sulfer Saudi crude oil. Consequently, increased Middle East oil production is not a quick fix to the current shortages being caused by the damage from Katrina.
The wholesale price of gasoline increased by almost $0.42 a gallon yesterday and retail prices went over $2.80 a gallon in Chicago. October crude-oil futures settled up $2.61 for the day at a new nominal record of $69.81 a barrel in trading on the New York Mercantile Exchange. Although frenetic buying ahead of big storms is normal in commodity markets, it is almost unheard of for the after-storm response to be even worse, which is a signal that the markets are betting that the recovery from the storm will take months. Indeed, the next five monthly contracts all closed at successively higher prices (called a "contango" in the trading business), with the last three all higher than $70 and futures for March, 2006 delivery closing at $70.11 a barrel. At very least, in view of the 55 cent per gallon rise in the price of September gasoline futures, my sense is that it is safe to say that we are all in for a huge shock at the gasoline pump over the next several weeks.
The status of most of the New Orleans-area refineries remains largely unknown. For example, Murphy Oil Corp.'s Meraux, La., refinery, which is located 10 miles southeast of New Orleans, is in an area with substantial flooding. Similarly, Chevron has been unable to reach its huge refinery in Pascagoula, Miss. and Exxon Mobil Corp. has not been able to get into its refinery in Chalmette, La., yet. On the other hand, Valero Energy Corp. announced that two key units of its St. Charles refinery were under three feet of water and that widespread electrical damage had occurred. The company estimated that it would take two weeks to re-start the refinery even after power is restored. Thankfully, the Louisiana Offshore Oil Port ("the Loop")-- the key Gulf Coast importation facility for tankers arriving from foreign producers of oil -- did not incur any catastrophic damage.
Clear Thinkers favorite James Hamilton has these further thoughts on the probable economic effects of Katrina. And this Wall Street Journal ($) article provides an excellent analysis of the New Orleans levee system and what needs to occur for the flooding in New Orleans to recede. Finally, Houston blogger Banjo Jones has a creative idea on how Houston can chip in to help the homeless of New Orleans.
August 30, 2005
The already dire situation in New Orleans has taken a turn for the worse this morning as the breach in the 17th Street Canal Levee is now 200 feet wide and slowly flooding the entire city. In short, the worst-case scenario may be occurring as flood waters completely fill the below sea-level bowl that is New Orleans, potentially turning Lake Pontchartrain and the city into one big toxic lake.
For those of you who cannot monitor developments via television, Brendan Loy has been doing an incredible job of blogging developments as they occur, so check on his site frequently for updates. Also, WWLTV in New Orleans has established this blog that provides continual updates on developments in the city. Finally, the Interdictor is also providing up-to-date eyewitness accounts of developments in New Orleans.
In addition, the Chronicle's Eric Berger has been doing an outstanding job of analyzing Hurricane Katrina developments on a more thorough basis on his SciGuy blog. The Chronicle's Loren Steffy has also been doing a fine job of keeping up with the financial implications of the hurricane over at his Full Disclosure blog. Finally, here is an excellent Washington Post article that summarizes the difficult situation well.
The disastrous situation in New Orleans is exhibiting how weblogs are becoming an increasingly important medium for disseminating urgent and specialized information. The Chronicle's excellent technology writer, Dwight Silverman, pushed the local newspaper into the blogosphere, and the brilliance of his vision is now being fulfilled by the his work and that of his colleagues. Kudos to Chronicle management for embracing this important information medium.
Officials of oil and gas companies and refineries with facilities in the path of Hurricane Katrina were scurrying around yesterday somewhat helplessly attempting to evaluate the extent of the storm's damage on key oil and natural-gas production facilities that rattled energy markets early yesterday. The bottom line is that it's going to take at least a few days -- and perhaps weeks -- to assess the damage fully and determine how long those facilities will be off-line.
Oil futures surged past $70 per barrel in overnight electronic trading on Monday, but fell back during the day. Oil for October delivery settled at $67.20, up $1.07 from Friday's price, but still below the previous record. When adjusted for inflaction, oil prices overall are still well below the high of $95.26 reached in April 1980.
Meanwhile, Hurricane Katrina set off a frenzy in the natural-gas trading pits, where the New York Mercantile Exchange imposed unprecedented emergency restrictions. Inasmuch as the U.S.'s major natural-gas-delivery terminal -- Louisiana's Henry Hub -- shut down early Sunday evening and did not reopen until midday yesterday, the Nymex Exchange declared an extremely rare "force majeure" delay of deliveries against its futures contracts. Although the force majeure declaration likely would cause only a minor delay in delivery on about 100 contracts (affecting a relatively small amount of $11 million in gas deliveries), such declarations nevertheless cause jitters in the gas markets that can affect prices.
Nymex gas futures for September delivery soared to a high of $12.07 per million British thermal units and settled up nearly 11% at $10.847, which was a record finish. The natural gas supply chain is particularly vulnerable to disruption because it must be moved at high pressure through specific delivery points and pipelines, while oil and other liquid fuels can be transported by truck, if necessary.
Another problem is that the nine Gulf Coast refineries that were shut down because of Katrina cannot be re-started by just flipping a switch. As noted in this Oil Drum post, restarting a refinery is a complicated process and, even in the best case, will require a period of several days to get back to 100% refining capacity. As noted yesterday, the Gulf region now supplies roughly one-quarter of the oil and natural gas consumed in the U.S. The New Orleans area alone is responsible for about 12% of domestic refining capacity that turns crude oil into gas for autos, jet fuel, heating oil and other products.
As the storm moved onshore, oil and gas companies began dispatching planes and divers into the Gulf of Mexico to begin evaluating the damage to rigs, pipelines and production platforms. Royal Dutch Shell PLC reported that two drilling rigs it had under contract -- Transocean's Nautilus and Noble Corp's Jim Thompson -- had been moved by the storm (the rigs are designed to float), but did not appear to be extensively damaged. Likewise, a BP PLC official fly-by inspection on Monday afternoon of several deepwater platforms also showed no significant damage. However, what takes more time to assess is possible damage to underwater pipeline infrastructure, which was already damaged last summer by underwater mudslides that resulted from the much smaller Hurricance Ivan.
Finally, don't miss Clear Thinkers favorite James Hamilton's piece on why Katrine could have a much bigger effect on the price of gasoline and natural gas than on the price of crude oil.
August 29, 2005
In overnight electronic trading on the New York Mercantile Exchange, October crude-oil futures opened up more than $4 over Friday's close, topping $70 a barrel for the first time. September gasoline futures were up over 20 cents (over 10%) to around $2.12 a gallon. September natural-gas futures, which expire today, increased by more than $2 (over 22%) to about $12 per million British thermal units. Some energy analysts are predicting the possibility of $80-a-barrel oil and $15 per million British thermal unit natural gas as a result of the storm.
These increases followed a selloff Friday afternoon when it appeared Katrina would move on the eastern part of the Gulf of Mexico and spare oil and gas production and refineries in the central Gulf. Over Friday night, the category 4 hurricane moved on a more westerly course that it through the middle of the oil and gas-producing areas of the central Gulf and the Louisiana refining system, which generates about 15% of total U.S. capacity. The Gulf of Mexico is the source of about a fifth of U.S. gas production and more than a quarter of U.S. oil production.
Three of the key facilities for the Gulf region's oil and gas production have been shut down by the storm -- the Louisiana Offshore Oil Port, the "Superman" facility that receives and distributes imports of crude oil, and Port Fourchon, which supports much of the Gulf's oil-and-gas production facilities, and the Henry Hub, which is the pipeline nexus for the U.S. natural gas industry and the delivery point for the Nymex futures contracts.
By the way, for an impressive picture loop of Katrina, check out this website. And, unfortunately, longtime New Orleans blawger Ernie the Attorney was not able to get out of New Orleans in time, so he is riding out Katrina in New Orleans.
August 27, 2005
For years, experts have been warning that a potential disaster looms if a major hurricane hits the New Orleans metropolitan area, much of which sits beneath sea level. It is beginning to look as if those predictions may come true later this weekend.
Over last evening, Hurricane Katrina took a westward course away from the Mobile, Ala.-Florida Panhandle area and appears to be headed directly for the New Orleans area.
This website (be patient, takes awhile to load) shows the catastrophic flooding that will occur in the New Orleans area as a result of a category 3 hurricane. Hurricane Katrina is currently predicted to hit the Louisiana coast as either a category 4 or even a 5 storm. Hat tip to my friend Scott Hagen for the link to this website.
If you are in New Orleans and reading this post, you should seriously consider getting out. Now.
May 17, 2005
The National Oceanic and Atmospheric Administration issued its annual storm forecast yesterday, and the NOAA is predicting from 12 to 15 tropical storms during this upcoming hurricane season (June through November). Or, as Fark translates, "We have no clue how many hurricanes there will be, so we say 'a lot' to keep our asses covered."
At any rate, the NOAA predicts that seven to nine of the storms could become hurricanes, and that three to five of those could become major hurricanes, which are defined as category 3 (winds of between 111-130 mph; here is a hurricane category chart) or above. Nine hurricanes developed during the hurricane season last year and four of those hammered Florida over a 40 day period.
Public officials along the upper Texas Gulf Coast are particularly concerned with the NOAA's forecast because the Houston area has not been directly hit with a hurricane since Hurricane Alicia, which was a category 3 storm in 1983. The eye of that storm came in on West Beach on Galveston Island and then essentially followed a path along I-45 through downtown Houston and beyond. The damage to the area was incredible, and left thousands of Houstonians without power for weeks. As bad as Alicia was, however, oldtimers in Houston contend that it was nothing compared to the destruction that was caused on September 11, 1961 by Hurricane Carla, which was a category 4 (winds of 133-155 mph) storm that had the same minimum barometric pressure as the great 1900 storm that killed over 6,000 people in Galveston.
Finally, this series of Houston Chronicle articles earlier this year revealed that many state and local public officials do not believe that they safely evacuate all coastal residents on the upper Texas coast in the event of a Category 4 or 5 hurricane. Not a comforting thought as we head into an active hurricane season at a time when the Houston area is long overdue to take a direct hit from a storm.