Tuesday, March 15, 2011

Economic impact of disasters

First, the Middle East, then Japan

Unrest in the Middle East caused oil to rise a few dollars in price, but not as much as is believed. It accounts for just 20 cents per gallon currently, but as Libyan Rebels have successes, saboteurs may strike directly at oil facilities there and in Saudi Arabia, and that would have more impact.

There is talk of the US intervening. I don't think we should. We are stretched to thin as it is, and I for one am not certain we want the rebels to win. I don't know who is behind them yet, and it could be the Muslim Brotherhood. If so, all these countries that are warring about "liberty" will convert to Fundamentalist Islam.

Meanwhile on the other side of the world, the impact of an earthquake and tsunami on Japan will be felt around the world. The markets have already gone negative, and there will be a loss of jobs as some good formerly shipped from Japan will be reduced or stopped. Ironically, oil and gas will go down in price, but this is only temporary, as replacing the electric generation capacity from the two destroyed nuclear power plants will require large quantities of coal, oil, and gas.

The commodities will go up, because the Japanese are people who harvest from the oceans and make things. The will be busy rebuilding for a couple of years, meaning smaller harvests (and to be sure, the ocean will have less now to harvest, as the earthquake and tsunami killed a portion of it) and more demand for raw materials to rebuild their country. We saw this same phenomenon with Katrina, and this is several times larger than Katrina.

More money being spent on rebuilding, less invested in industry, more demand on resources, and less resources all impact inflation. This will definitely mean more inflation, as you and I see it. The government numbers may not show anything at all, since our wages will not go up.

And, last, of course the anti nuclear lunatics are coming out of the woodwork to spout off their insanity. Meltdown or no meltdown from these plants, building more plant of our own is a must. We are many years behind on building nuclear plants, and several years behind on building coal powered plants. Certainly, there are things to be learned from the way this disaster unfolded, but there is no sanity in those who say we should not build.


Pilgrim said...

"Meanwhile on the other side of the world, the impact of an earthquake and tsunami on Japan will be felt around the world. "

Not to distract from your good post, but I thought you might find it interesting that Y'all in Texas did, literally, feel the impact of the quake.

I work for a hydrogeology firm, and we have three Texas offices. One office has a job in downtown San Antonio, with a data-logger in a groundwater well. The data-logger records real-time water table elevations.

The quake made your Texas groundwater jump like a flea for two hours. It took just 15 minutes for the impact to reach San Antone.

TRex said...

You are not distracting from my post at all. I welcome and value comments, especially yours.

I do wonder about the expression "jump like a flea," as a flea can jump quite high by comparison to it's size.

I looked and was not able to find anything about it in the mainstream media (not surprising). Did the water table make a huge jump? Several Jumps?

I love physics (phun stuff), and would have predicted measurable changes within the hour at San Antonio, but my knowledge of geophysics is inadequate to say what those changes would be.