Gasoline is expected to hit $4/gallon sometimes soon. (Who will monitor the global oil industry’s profits pre- and post-Katrina?) That’s bearable, for us. We have some measure of control over the amount we drive; we don’t drive far; our cars are relatively thrifty; and we’re rich, by current standards. For some, in the virtual absence, in most parts of the country, of effective public transportation, $4/gallon will be enough to push them over the edge, further skewing those current standards. And I suspect that gas prices will never go down, and may, in fact, peak at much more than $4.
But the discomfort created by high gasoline prices pales compared to the damage to the national and global economies that will be the inevitable result of the loss, for months at least, of the Port of Southern Louisiana. Charles Stross gives an overview of what’s at stake. The Port, which stretches for 50 miles north and south of New Orleans, is the largest port in the United States, and the fifth largest in the world.
Stross quotes a report from StratFor:
“It is the key port for the export of grains to the rest of the world — corn, soybeans, wheat and animal feed. Midwestern farmers and global consumers depend on those exports. The United States imports crude oil, petrochemicals, steel, fertilizers and ores through the port. Fifteen percent of all U.S. exports by value go through the port. Nearly half of the exports go to Europe.”
Stross estimates that the economic cost of closing the Port of Souther Louisiana for up to three months may equal 5% of the US balance of trade with the rest of the world; the cost, he says, is likely to be an order of magnitude higher than the $25-35 Billion in probable insurance claims, and may be more than the cost of the Iraq war to date. He asks, “What are the likely consequences (locally and globally) of blowing a 5% of GDP sized hole under the waterline of the US economy?”
Iraq has been draining the resources of the country, pushing people deeper into poverty, ripping gaping holes in what’s left of a public safety net, and putting many areas that have relied on federal programs to survive in jeopardy (including New Orleans; one probable reason for the break in the levees was the huge cuts suffered over the past several years by the engineering efforts structured to maintain the levee system.) Now double that drain.
The levees have been breached. It’s hard to see how we will be able to keep our heads above water.
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