Hurricanes Likely to Have Ripple Effect on Economy
RENEE MONTAGNE, host:
This winter will bring with it some sticker shock. Economists say heating your home could cost almost 50 percent more than it did last year. A lot of that extra cost is due to hurricanes Katrina and Rita, which wrecked many oil and gas rigs and pipelines in the Gulf of Mexico. The cost of consumer goods, from shampoo to auto tires, could also go up. Even the air could get dirtier. NPR's Christopher Joyce has more on the ongoing hurricane effect.
CHRISTOPHER JOYCE reporting:
This winter may be rough for Dorothy Tucker in Medford, Massachusetts. She's an 83-year-old retired health worker on a fixed income. The hurricanes will make her already high fuel prices even higher. Tucker was invited to tell her story to an energy subcommittee in Congress, where Democrat Edward Markey of Massachusetts asked her how she'd manage.
Representative EDWARD MARKEY (Democrat, Massachusetts): Where do you get the extra money for what could wind up, it sounds like to me, an extra $800 or $1,000?
Ms. DOROTHY TUCKER (Medford, Massachusetts): Nobody knows when I don't eat. And a lot of people that have my income, we are proud. We don't tell.
JOYCE: It could be many months before Tucker and most other Americans see any relief from the Gulf of Mexico. Half the oil and gas operations there are still shut down. The federal government offers some help with heating bills for low-income households. How much help depends on how much money Congress appropriates this year for the program. But it's not just heating bills that will rise. Energy experts say the hurricanes' ripple effects will be broad. The shortage of natural gas is especially influential. Kevin Swift is the chief economist for the American Chemistry Council, which represents the chemical industry. He says consumers don't realize how many things they get from natural gas.
Mr. KEVIN SWIFT (American Chemistry Council): I like to talk about a bottle of shampoo. If you look at the materials value of a bottle of shampoo, 100 percent of it is petrochemistry. It's the shampoo itself, it's the ingredients that go into the shampoo, the fragrances, the emulsifiers. It's the bottle, it's the cap on the bottle, it's the seal beneath the cap, it's the label, it's the ink on the label, it is the glue on the back of the label. It's all chemistry.
JOYCE: Natural gas is turned into ethane, then ethylene, the raw material for things like PVC pipes, detergents, latex, food packaging, trash bags, diapers, milk jugs, pantyhose; the list is much longer. Companies that make all these products are now paying more for their raw material. Swift says consumers will feel the pinch this winter.
Mr. SWIFT: If you remember those Tom & Jerry cartoons, when there's a kink in the hose and it builds up to a big bubble or bulge and it's just ready to burst forth, that's what we're going to be seeing as we go from these months out, more and more inflationary pressures.
JOYCE: Even the quality of the air could suffer. In Massachusetts, for example, utilities that burn natural gas to make electricity are also allowed to burn fuel oil, but only a few days a year. This winter, the state may allow utilities to burn a lot more oil if gas runs short. Alan Nogee is an energy specialist with the Union of Concerned Scientists in Boston.
Mr. ALAN NOGEE (Union of Concerned Scientists): Oil is far more polluting than natural gas in its contribution to acid rain, smog and in the carbon dioxide pollution that contributes to global warming.
JOYCE: The hurricanes have highlighted the fact that there's not enough natural gas to go around. US prices have been rising steadily and were more than twice those in Europe, even before the hurricanes. Industry groups counsel conservation but also want more drilling offshore for new supplies. Conservation groups, like the Alliance to Save Energy, argue that it's easier and more economical to turn down the thermostat, improve insulation and use less.
Ms. KARA SAUL RINALDI (Alliance to Save Energy): It is true, unfortunately, that sometimes, it is that pain in the wallet that makes people act.
JOYCE: Kara Saul Rinaldi is the alliance's policy director.
Ms. RINALDI: These are the times, when there are high prices, that it helps people to get the money back much more quickly by using their energy much more efficiently.
JOYCE: Rinaldi notes that Congress recently passed a new energy bill that offers tax breaks for improvements in home energy efficiency. But lawmakers in Washington want to go back to the well. They're now debating, again, whether to open up new oil and gas fields in the Arctic National Wildlife Refuge in Alaska. Christopher Joyce, NPR News.
MONTAGNE: You're listening to MORNING EDITION from NPR News.
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