The Dallas Morning News

DALLAS – The economic tally of Hurricane Katrina has barely begun, but effects are bound to ripple across the country.

Home to as much as a quarter of oil and gas production in the United States, the Gulf Coast is also the site of five of the nation’s dozen busiest ports. The region’s refiners produce about 45 percent of U.S. gasoline.

The area’s impact goes way beyond energy, too.

The Port of South Louisiana alone handles 15 percent of all U.S. exports.

In a just-in-time economy, those facilities are crucial nerve centers that tie the Mississippi River Delta to the world economy.

“Anytime you have a transportation supply disruption, there are going to be ripple effects,” said John Robertson, a senior economist at the Federal Reserve Bank of Atlanta.

“The longer the disruption, the more significant it is.”

With the fallout still unknown Monday, economists could only guess on the storm’s commercial impact.

At the very least, Katrina will have knocked out the New Orleans economy as the damage is assessed and cleaned up, said Mark Zandi, chief economist at Economy.com in West Chester, Pa.

“It’s very disruptive for the people who live there, but it won’t have any significant macroeconomic consequence,” he said.

On the other hand, Zandi added, extensive destruction of ports and the region’s energy infrastructure would lead to supply disruptions and higher prices, particularly in an exceptionally cold winter.

“It would be happening at a very bad time for the energy markets,” he said. “It would be particularly nettlesome because refiners are building stocks of home heating oil for the winter.”

Last year, Hurricane Ivan disrupted production in the Gulf for months.

The region’s ports are equally key to the U.S. economy. Shipping, warehousing and other logistics businesses account for billions in commerce annually. The Port of South Louisiana itself is the nation’s largest port in total trade, handling 198.8 million tons of cargo in 2003.

If disrupted for long periods of time, clogged ports can kink up the flow of goods from Latin America to the U.S. Midwest. Previously, a 4 1/2 day closure of the Port of New Orleans cost $61 million in direct and indirect costs, said Aaron Ellis, a spokesman for the American Association of Port Authorities.

The direct impact to groups such as stalled stevedores and truck drivers cost $3 million to $4 million each day, he added. A week’s closure would ripple out to retailers who would be unable to receive ordered goods. A robust construction industry would within weeks feel the pinch if orders of steel and plywood don’t show up as expected, economists said.

On the flip side, U.S. farmers rely on Gulf ports to ship agricultural products around the world.

“The whole infrastructure in the Midwest and the upper Midwest is really stretched tight,” said Mike Davis, an economist at Southern Methodist University. “If the barges can’t unload in New Orleans, then they can’t get back up to Illinois and Iowa to load grain. You’ve got problems.”

The situation is especially complicated by the calendar: the start of the harvest season.

Still, the hurricane’s hangover could mean a boost in the regional economy this fall, “depending on how much insurance and government aid the region could get,” Zandi said. “That’s what happened in Florida.”

As Florida knows, “another thing to consider is that we’re still in hurricane season,” he added. “It isn’t over yet.”

And Gail Dudack, chief investment strategist at SunGard Institutional Brokerage Inc. speculated that Katrina might be able to accomplish what lofty housing prices and record breaking energy costs have yet been unable to do: convince the Federal Reserve Bank to hold interest rates when it meets Sept. 20.

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