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It looks like Hurricane Rita is barreling down for Texas. The NHC is predicting a possibility of a category 4 hurricane. That's what Katrina was when it hit the Gulf Coast. Right now, everyone terrified of hurricanes so everyone is using their brains and getting the hell out of town in places like Galveston, Houston and even New Orleans is getting everyone back out that had come back. If this storm were to hit NOLA again, it would probably finish the city off. If it cut to the Gulf Coast again to hit maybe Mississippi or areas that Katrina hit, I don't know what folks would do. Here's an article on CNN. Here's an excerpt covering part of the evac:
GALVESTON, Texas (CNN) -- With Hurricane Rita intensifying as it treks westward through the Gulf of Mexico, the mayor of Galveston declared a state of emergency Tuesday night.
Mayor Lyda Ann Thomas ordered mandatory evacuations of nursing homes and assisted-living facilities starting at 6 a.m. Wednesday.
She also said mandatory evacuations of other parts of the city would begin at 6 p.m. Wednesday.
The major point we must consider though is the economic impact of another category 4 hurricane. Depending on how it hits, it might devastate the nation further. Much of our nations oil infrastructure is located all along the Gulf Coast. New Orleans is still fighting for life and while the docks themselves weren't that bad, the infrastructure to support those is on hold for the moment. Most of the shipping is being routed toward Houston. So is Hurricane Rita. Some of the largest oil refineries in the U.S. are also near the Gulf Coast of Texas. It would drive oil prices up higher and some people say the country is taxed now... it would get much worse.
A recent opinion by Professor Peter Morici of Robert H.Smith School of Business at the University of Maryland offered some insight:
Moreover, the full impact of Hurricane Katrina on the economy remains vague and uncertain—economists have been forced to revise their forecasts more than once with new revelations about the damage and chaos wrought by state and federal dysfunction.
One of the problems he addressed was the housing bubble so many discuss. The Fed has raised interest rates the last several months in an attempt to get a hold on the economy. Morici points out though raising interest rates at this time would create real problems as the need for low interest construction costs will be a necessity if the Gulf Coast is to be rebuilt.
Keep in mind however, this wasn't taking into account the current hurricane. If Rita wreaks havoc like Katrina did, oil could very well hit the $80 mark a barrel. Right now, the market seems to think Rita will dodge the Houston area refineries and dropped $1.16 a barrel today. Even so, all the major oil companies are evacuating their rigs in the Gulf.
The refineries in Houston handle about 13% of the U.S. processing capacity and while they are operating normally, they are beginning preparations just in case.
In any event, there are real worries right now and if Rita turns ugly as some are predicting, it could severely damage the nation's economy as a whole, primarily because of the oil.
All that being said, the Fed said today they will probably raise the interest another quarter point. They said they were more worried about the inflation and the short-term problems of the Gulf Coast. The Washington Post reported on this story:
Federal Reserve officials expressed confidence yesterday that Hurricane Katrina has caused no more than a temporary setback to the U.S. economy, allowing them to raise their key short-term interest rate another notch to make sure inflation stays under control.
As the federal government and insurance companies are put tens of billions of dollars into Gulf Coast reconstruction, Fed policymakers expressed more worry about rising inflation pressures than slower economic growth and indicated that they will probably keep raising interest rates in the months ahead.
Whether or not their report takes Rita into account is uncertain. One can only hope that Rita does minimal damage so this won't be an issue.
posted by Stithmeister @ 10:46 PM
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I'm currently working in the telecomm industry but one of my passions is still politics.
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