Making Life Livable Again
The outpouring of care and support for victims of Hurricane Katrina has really been amazing, and quite frankly, truly inspiring.
Most people have probably heard of various problem areas and are aware of the difficulties associated with the relief and humanitarian efforts related to the recent unprecedented Gulf Coast disaster. In circumstances such as these, there are always villains; but the number of heroes, in my estimation, far outweighs those who seek to take advantage of the situation.
The news is filled with stories about individuals and groups who have shown tremendous compassion to others they did not know personally. While they might have been strangers to them in one sense, they were nonetheless fellow Americans, and we were quick to reach out. Our nation continues to provide a helping hand, and many parts of the country have opened their doors to accommodate the displaced.
Perhaps no area has answered the call for help to a greater extent than Texas. Across the state, Gulf Coast evacuees are being provided with essentials such as shelter, food, and clothing. Medical, social, and veterans’ services, as well as emotional support, are being offered with unfailing generosity. In several communities, employment opportunities are being made available to those with particular skills.
Schools are enrolling children who have had to leave their homes, colleges are considering ways to enable students to continue their higher education pursuits, and churches and synagogues are welcoming those who wish to worship.
I was born in Texas and have lived here my entire life. I have always known it to be a great state—in so many areas. Seeing the responses that our government, community, business leaders, and countless other Texans have made to those in need during this difficult time has justly confirmed it. The support and contributions from lemonade stands to corporate boardrooms continue to swell.
As an economist, I often look at situations from a unique perspective. Over the past few days, I have considered the impact that the temporary migration of nearly a quarter of a million people might have on the Lone Star State.
Involved in my calculations were factors such as the number of evacuees, a reasonable distribution of their average length of their residence here, the educational programs provided to children and college students, the medical and social services offered to those with special needs, as well as other relevant data. From my examination of the situation, it appears that the minimum incremental cost for those coming to Texas will be approximately $250 million in the very short run, an amount which is over and above the higher gasoline prices and other things everyone else pays as well. This amount, though large, is only about a little over $10 per capita. Even if the total ends up being twice that amount or more, it is something that can well be absorbed. (Now that the federal government has authorized full reimbursement for extended housing allowances and other expenses, the total expenditures flowing through the state over time will be much higher.)
In the case of Texas, the gains from increased port activity and the energy sector will insulate Texans from some of the worst effects. While we are predicting a drop of 0.7% in US economic growth over the next few months (related to where it would have been otherwise), the corresponding drop in Texas is projected at only 0.1%-0.2%.
The money to support our hospitality, of course, will come from numerous sources including the federal government as the primary mechanism (Texas has been declared eligible for disaster relief funds), as well as state and local governments, charitable organizations, private corporations, and individual donors engaging in unselfish acts that will never find their way into economic statistics. The cost of helping our neighbors return to a more normal life should not be a financial burden.
Whatever the ultimate cost of Katrina to our state, we are capable of providing it. Texas has always answered the call for assistance. I’m pleased we are faithfully continuing this tradition and helping make life livable again for our neighbors to the east. It makes me really proud to be a Texan.
posted @ 08:39 AM CST [link]
Friday, September 2, 2005
Katrina—A Name to be Long Remembered
Although reports are still coming in on the number of lives lost and the amount of destruction wrought by Hurricane Katrina in various parts of the affected states bordering the Gulf of Mexico, there is no doubt that the last week of August 2005 will be long remembered as a unique time in American history.
Texans have joined the world in viewing the shocking video of flooding and devastation in parts of Florida and in southern Louisiana, Mississippi, and Alabama. Many people are still avidly trying to absorb newspaper, television, and Internet accounts of the dramatic manifestation of nature’s tremendous power with wind and water.
Everyone is understandably saddened by the hundreds of tragic deaths and the difficult adjustments now demanded of so many families, most who have lost all of their possessions. The suffering and reevaluations individuals and families are enduring will probably leave lasting emotional scars.
Of particular concern to many people, also, are the financial burdens those southern states are experiencing and the expected impact the hurricane’s havoc will have on their economies. Although some time will be required to determine the full extent of the damages, when it is finally added up, the total undoubtedly will be in the tens of billions of dollars or even higher. Katrina could possibly become the costliest storm the insurance industry has ever experienced.
A unique feature of this hurricane is its effect on people far beyond those living in or near its destructive path, particularly with regard to gasoline prices. The jump at the pump will be clearly evident across the US over the Labor Day weekend as prices are expected to soar dramatically. Its timing and location give it a dimension beyond those of other natural disasters.
Although the demand for fuel will most likely decline somewhat later in the fall, the price of crude oil is not anticipated to see a significant drop for a while. If Katrina has caused major damage to the US oil and refining assets, the industry, which was already struggling to meet needs, will be further strained.
Operations in the Gulf of Mexico usually provide some 1.5 million barrels per day of crude oil, a figure that represents almost 2% of global oil production. Hurricane Ivan, which struck last September and which was much less powerful than Katrina, wiped out about 45 million barrels of US output in the Gulf over a six-month period.
Until the full extent of damage to oil drilling installations and refineries is calculated, it would be imprudent to forecast changes or the length of time required for the energy sector to return to normal. The offer by Saudi Arabia to immediately increase its oil production could provide some relief as will any release of our nation’s strategic oil reserves. Even so, the price tag for fuel over the short term will probably remain relatively high.
As we have learned from previous hurricanes, especially those that struck Florida last year, Americans have a unique resilience when faced with dire circumstances. The response from all over the country has been highly positive as people not directly affected by the situation want to help those who need so much assistance at this time. In fact, if history is a guide, even a storm of this magnitude will not deter overall economic expansion to any substantial degree, and the rebuilding process will bring a notable stimulus. None of that, however, can diminish the human tragedy, which is and should be our primary focus.
Our nation’s economy is strong, and we have extensive experience in rebuilding myriad kinds of structures as well as roads, bridges, and even levees. As we seek to achieve these objectives, various individuals and organizations will be called upon to go the extra mile.
Because of their particular capabilities, industrial sectors involved in the rebuilding and restoration of those devastated areas will probably realize economic benefit from their efforts in the coming months and years. That is a topic for another time. Our nation is fortunate to have so many able and willing to meet challenges such as those wrought by Katrina, a name that will be hard to forget.
posted @ 08:14 AM CST [link]