Daily Archives: September 21, 2005

Buzzard’s luck

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Entergy.gifIn 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.

More on the sad state of the airline industry

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airliner6.jpgThe Wall Street Journal’s ($) Holman Jenkins addresses the sad state of the airline industry in his Business World column today, and hammers home a point that this previous post made about the ownership stake in the reorganized United Airlines that the debtor-airline is proposing to foist on the federal government under United’s pending reorganization plan:

“Let’s not delude ourselves: Through the bankruptcy and pension insurance systems, Washington is already engaged in a bailout — an incoherent and self-defeating one.”

Read the entire piece, and feel free to peruse this long line of posts over the past couple of years on the sad state of the airline industry.
After the economic shakeout of the early and mid-1980’s — which included the demise of the savings and loan industry — the federal government ended up owning large inventories of foreclosed real estate and related assets in the wake of failed lending institutions. A number of entreprenuers bought those assets from the government for pennies on the dollar and deployed the assets in properly capitalized businesses. It’s beginning to look as if a similar market in government-owned airline securities is developing, and it will be interesting to watch if a government sale of those securities at rock-bottom prices will prompt the type of true reorganization from a capitalization standpoint that the American airline industry desperately needs.

Economic ripples of Rita

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traders6.jpgCrude-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.

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Handy hurricane information links

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Rita092005.jpgGiven 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.
Dr. Jeff Masters’ WunderBlog. Jeff Masters is the Weather Underground’s Director of Meteorology and provides first-rate analysis in his blog.
The Google Map link to the upper Texas Gulf Coast.
This site provides a good overview of hurricane information, including this pithy chart explaining the categories of hurricane strength.
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.