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.