From gas stations to grocery stores, farms to factories, the force of Hurricane Katrina is rippling through the economy, confronting consumers and businesses with higher prices and logistical dilemmas, even thousands of miles from the Gulf Coast.
Unlike most natural disasters, Katrina seems a rare economic event – sweeping and devastating enough to damage commerce well beyond its region, affecting the price, supply and markets for goods critical to business and counted on in daily life.
In Colorado, it will almost certainly cost more to build homes and transport goods as a result of the hurricane’s devastation, several economists said Wednesday. The state’s tourism industry also will be affected, both negatively and positively.
“There will be upward pressure on prices for timber, plywood and basic construction materials that will be needed in a huge way in the gulf…,” said Jeff Thredgold, an economist with Vectra Bank Colorado. “There will be a big demand for trucking. The Mississippi (River) is out of commission for the moment, so truckers have the opportunity to bump up prices, and given the demand, those prices are somewhat justifiable.”
Tourism will suffer if fuel shortages, real or perceived, cause people to worry “they won’t be able to drive to Colorado,” said Tucker Hart Adams, regional economist with U.S. Bank. On the other hand, those who planned vacations and conventions in New Orleans won’t be able to travel there and may choose Colorado as a destination instead, she said.
“You can see lots of little pieces, both positive and negative,” Adams said. “I don’t think there’s any way to add it all up and say, ‘This is the impact.’ Anybody that tells you they’ve got the answers right now is whistling in the dark.”
The effect on Colorado’s agricultural industry is tough to quantify. Volatile fuel prices will hurt agriculture, which will use more fuel during the next three months than it does during other parts of the year.
“We can’t do the management strategies other industries might, such as shutting down or lowering activities,” said Dawn Thilmany, associate professor of agricultural economics at Colorado State University in Fort Collins. But the devastation of the Southeast’s poultry and seafood industries – and price increases that will follow – could boost Colorado’s beef industry, she said.
Nationally, after Katrina, the stock market’s focus has shifted to the storm’s longer-lasting consequences on energy and other markets.
The virtual shutdown of a region that is a nexus for oil production, refining and importation poses the most serious economic risks. It is already punishing consumers at the gasoline pump and causing long-term worries for businesses, including financially shaky airlines, trucking companies and steel producers.
“The national economic consequences of Hurricane Katrina will be much broader and deeper than initially estimated by economists, including this one,” said Peter Morici, a professor at the University of Maryland business school.
Katrina’s casualties already include airlines, railroads, restaurants, retailers, hotels and casinos, and property-and-casualty insurance companies.
But stock-market investors usually can find winners in any losing situation, and Hurricane Katrina is no exception. Companies that are expected to gain from Gulf Coast recovery efforts have experienced remarkable share- price turnarounds, even if their stock was down before the hurricane. As of Thursday, among the best-performing industry groups were oil and natural-gas refining and services, construction companies and suppliers of basic materials such as steel.
The Associated Press, Bloomberg News, Cox News Service and Denver Post staff writer Margaret Jackson contributed to this report.
