Dividends and Ida’s impact on US economy will likely be modest: economists

Almost no one wishes bad things or disasters to hit any area, but it is a natural happenings. The first thing you should be worried or concerned about is the people and then you can learn something about the economy of the community.

At the end of August, hurricane Ida came ashore in Louisiana, stalled for 6 hours and moved up to the northeast where it caused extensive flooding. However, in the aftermath information can be learnt about the economy where the Hurricane went through. For generations, the economy of New Orleans has been based on the Mississippi River and the goods which flow up and down the river. The city is a tourist and convention destination and many hope it recovers. The last time there was a big hurricane, the NFL football team went to the Super Bowl (as a fan here is to hoping).

In an article by Martin Curtsinger of the Associated Press, north of New Orleans and to the south into the Gulf of Mexico lies oil and gas ocean platforms for the region has 13% of the US total refining capacity. (another big area of refinery capacity is south of Houston which was not affected). In the Gulf of Mexico, during the storm 96% of oil production and 94% of natural gas production was shut down according to the Department of Energy.

A number of years ago, Hurricane Kartina caused more damage than Ida only because the levee system which keeps the water out of New Orleans broke and besides wind damage there was water damage. For the insurance industry which is in the business of measuring risks and paying out damages, they were expecting to pay$10 billion rather than the $90 billion that Katrina caused. For the average person, President Biden declared the area a natural disaster area prior to the Hurricane which allows federal funds and people to help the states (one of the good things which came out of Katrina).

With every hurricane, the power goes down because the wind blows the poles down and people have to put them back up which takes time. The good news is power to the big refineries was not expected to be out for too long (just enough to send gas prices up for the Labor Day weekend).

Linking to dividend paying stocks, when you invest in a profitable company part of your homework was to determine how they function and before and after disasters. We all know some will happen, we do not know when and how serious. If your company can bounce back, then it likely means during the non disasters it is well managed. Nobody wants a disaster, but as investors you can learn from them.

There are more questions than answers, till the next time – to raising questions.

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