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September 22, 2005

How Bad?
Posted by Jim Macdonald at 02:58 PM *

From the Houston Chronicle, February 20, 2005:

Houston’s perfect storm would feed on late summer’s warm waters as it barreled northward across the Gulf of Mexico, slamming into the coast near Freeport. A landfall here would allow its powerful upper-right quadrant, where the waves move in the same direction as the storm, to overflow Galveston Bay. Within an hour or two, a storm surge, topping out at 20 feet or more, would flood the homes of 600,000 people in Harris County. The surge also would block the natural drainage of flooded inland bayous and streams for a day or more.

It only gets better:

“Unfortunately, we’re looking at massive devastation,” said Roy Dodson, president of the engineering firm Dodson & Associates, which Harris County asked to model realistic “worst-case scenarios” for a major hurricane hitting the area.

Dodson’s firm modeled more than 100 storms of varying power, speed and landfall. It concluded that a large Category 4 or Category 5 — a storm only moderately larger than the four that struck Florida last summer — would cause as much as $40 billion to $50 billion in damage. That’s 10 times the cost of Tropical Storm Allison and approximately the city of Houston’s entire budget for the next 15 years.

Further sections of that article include “Coastal development,” “20-foot wall of water,” “Wave modeling,” and “Surprises after landfall.” It’s worth a read.

The good news is that FEMA is already prepositioning food, water, and supplies, and the Texas National Guard is predeploying satellite comms gear. The bad news is that gas stations are running out of fuel and the evacuation routes have turned into major traffic jams.

The next day or so will be very interesting.

Comments on How Bad?:
#1 ::: fidelio ::: (view all by) ::: September 22, 2005, 03:32 PM:

According to Weather Underground, the latest prediction is for landfall between High Island, Texas (east from Glaveston, almost half-way between Galveston and Port Arthur, and Cameron, Louisiana.
http://www.wunderground.com/blog/SteveGregory/show.html

Of course, there's still of lot of gulf to cross between now and then, and Rita's fully capable of jumping at the last moment like a startled cat, but an eastward track is an improvement. For very limited values of that word.

#2 ::: "Charles Dodgson" ::: (view all by) ::: September 22, 2005, 03:45 PM:

We may be seeing flaws this time with "everyone get in your car" as an evacuation plan even for the people that have a car. Here's a note from some people who tried it, almost literally got nowhere (they report 50 feet of forward progress in two and a half hours), and returned home to avoid running out of gas.

As for the storm itself, FWIW, it's still a crapshoot. Steve Gregory's latest, as I write, says the models are now predicting landfall closer to the TX/LA border. That would spare Galveston and Houston the very worst of the storm surge, which would be concentrated at the point of landfall and due east. It would, however, add to the risk of further damage to New Orleans.

What's even more worrisome is that a lot of the models are predicting that after landfall, the storm may "stall" for a day or two, dumping huge amounts of concentrated rain ... somewhere. If it stalls over Texas, flash flooding could be a very serious problem. Further east, there's the worrisome prospect of further levee damage.

And yet... I like storms. I like watching them. I like the thunder and the fireworks. I like watching stuff get blown around. If you think this is because I've never had to clean up the mess from a bad one... you seem to have me pegged.

#3 ::: TexAnne ::: (view all by) ::: September 22, 2005, 03:58 PM:

It'll spare Galveston, but my childhood home will be shellacked. The trouble is that the Gulf Coast from Houston to NO has very little empty space. There's another little hamlet practically every other mile.

This message brought to you by a person whose parents are going east on I-10, very very slowly.

#4 ::: Josh Jasper ::: (view all by) ::: September 22, 2005, 04:01 PM:

I've celaned up after a major storm, but I still like being in/near one. It's close to a religious experience, seeing weather that powerful.

#5 ::: Andrew Gray ::: (view all by) ::: September 22, 2005, 04:08 PM:

I've just been pointed to this, a NASA study of the impact of a Cat4 storm on the Galveston area (and thus JSC, which they are understandably concerned over). May be of some interest.

#6 ::: no longer a reader ::: (view all by) ::: September 22, 2005, 04:56 PM:

This is me not reading this blog anymore.

Because you know reading the worst case is so uplifting.

#8 ::: Erik V. Olson ::: (view all by) ::: September 22, 2005, 05:26 PM:

Central Pressure's apparenly back to 913mb, and the eyewall replacement cycle is finished. She's over a colder eddy current, but is moving towards a warmer one -- but shear from an anticyclone may begin to hold her back.

The problem is that sheer and the high pulling away from Ohio is turning Rita further and faster than we thought. Every forecast track in the last two days has moved to the right -- we started as a "Mexico US border" landfall, we're now looking at "TX/LA border" as the focus point.

The cloudtops have cooled again, the eyewall is closed, clearing, and back down to 17nm (from the occluded 45nm at the "height" of the eyewall replacement.) All signs that she's stregthening again, and 915mb is still a very, very low pressure -- indeed, it's hard to say 125kts sustained in the face of that pressure, which is more typical of 140-150kts.

Woops -- new pass, central pressure is now 911mb. Max flight winds still 133kts, implying (by the 90% rule) sea level winds of 120kts, or 140mph -- high Cat IV. Still showing two eyewalls, 15nm and 40nm, both solid, the outer contracting. She's winding up again.

The hot raw data, from the crazy guys who fly through these beasts, is here. Instructions on interpreting are here.

#9 ::: Lizzy Lynn ::: (view all by) ::: September 22, 2005, 08:29 PM:

I'm glad you (Erik, CD, Fidelio) are doing the research, so I don't have to. Thanks. I'm not a disaster buff, but I've been in, evacuated from, and cleaned up after hurricanes, and I can't help fixating. Josh, I agree: a storm of that power is like a religious experience: one is awed.

TexAnne, my prayers are with your parents. If you don't mind my asking, what are their names? (If my asking makes you uncomfortable, please forget it.)

Rotten Thought #1: The gridlock on 10 may end up putting as many people in danger as would have been in danger had they stayed in their homes.

Does anyone know if Rockport, TX is in the path of the storm?

#10 ::: TexAnne ::: (view all by) ::: September 22, 2005, 09:22 PM:

Lizzy Lynn: thank you! They've reached a relative's house, and unless the track changes drastically, they'll be able to stay put. And Rockport is down by Corpus, which is way far away--even when landfall was going to be Houston, it still wouldn't have caused problems. (OK, maybe a little small storm surge. But no calamities.)

#11 ::: Michael Croft ::: (view all by) ::: September 22, 2005, 10:09 PM:

My mother-in-law landed at Houston Intergalactic Airport at 5PM on her return from China and reached her home 2.5 hours later. She's battening down, but of course the stores are all bare. She's west of Houston, so we're hoping she misses the brunt of it.

Many of our Houston-based friends who tried to leave have turned back. It's better to be in the house than in traffic with no gas when it hits. Or so they hope.

There's noplace good for this to hit. Only places where it may be worse.

#12 ::: Lizzy Lynn ::: (view all by) ::: September 22, 2005, 11:54 PM:

TexAnne: Thank you. I have a friend in Rockport. Glad to know your parents are probably safe.

#13 ::: Lizzy Lynn ::: (view all by) ::: September 23, 2005, 12:35 AM:

By the way, I heard from an acquaintance today -- who heard it from a family member -- that gas in Goergia is costing $7 a gallon. Has anyone else heard this?

BBC is reporting that heavy rain is falling on New Orleans, threatening to break the just-repaired levees. Oh, and that due to encroachment on their habitat, orangutangs are nearly extinct.

Aargh!!!

#14 ::: Linkmeister ::: (view all by) ::: September 23, 2005, 02:56 AM:

Lizzy, from Atlanta Gas Prices: $2.37 - #2.79 per gallon. There aren't any listings for areas other than Atlanta, but...

What you heard might be a candidate for Snopes (or might not; who knows what rural Georgia is undergoing?).

#15 ::: Jackie M. ::: (view all by) ::: September 23, 2005, 03:20 AM:

What's even more worrisome is that a lot of the models are predicting that after landfall, the storm may "stall" for a day or two, dumping huge amounts of concentrated rain ... somewhere. If it stalls over Texas, flash flooding could be a very serious problem. Further east, there's the worrisome prospect of further levee damage.

But no, it gets even better... check out Steve Gregory's Sept. 23, 2005/12:05 CDT report -- specifically, the bit about "POST LANDFALL THREAT -- AND MORE BAD NEWS." It's pretty bad news.

I have a Dutch friend who tells me that $7 is "only" about what people pay back in the Netherlands.

#16 ::: Doug ::: (view all by) ::: September 23, 2005, 05:52 AM:

From the Chronicle article:

"Newer skyscrapers, including many built during Houston's downtown boom in the '80s, were modeled in wind tunnels to determine their performance in extreme weather events. Most should survive the storm, said [Dennis Wittry, managing director of Houston Structural Operations at Walter P. Moore, an engineering firm.]."

"Most" of the skyscrapers should survive?

#17 ::: marrije ::: (view all by) ::: September 23, 2005, 06:01 AM:

Jackie, I have a very bad head for gas prices, so I couln't tell you the prices off the top of my head, but I looked it up.

Currently, Shell's advisory price in the Netherlands (probably not the price at the pump, because owners are free to sell at their own price) is 1.49 euro a litre, that's 5,64 euro a gallon, currently 6.85 dollar.

On July 1st, this was 1.37 euro a litre, 5.19 euro a gallon, which is 6.30 dollar.

Eep! I guess we do pay a lot.

#18 ::: G. Jules ::: (view all by) ::: September 23, 2005, 06:43 AM:

Chiming in on gas prices -- gas in Mississippi, even down south where I am, is only $2.50-$3.00 in range right now. The woman at Avis said they were seeing long lines, though, of people who thought it wasn't going to stay there, and some stations were only selling premium. I dunno. I was in Atlanta two weeks or so ago, and they were hovering just under $3.00, only a couple of days after the media were reporting that Atlanta was having shortages.

Of course, that's just gas prices. I've only gotten within 60 miles or so of the coastline and the kind of damage that far inland is already horrifying -- I'm glad I'm not even trying to get to the coast. I'm also glad my plane out of here leaves this afternoon. (A lot of the people I've talked to here feel like Rita's going to turn and hit them again, even though she's not forecast to. I guess after Katrina, it's hard to believe there's a severe storm headed sombody else's way.)

#19 ::: Dave Luckett ::: (view all by) ::: September 23, 2005, 06:46 AM:

My calculation at $A1.30 per litre yields $US3.80 per gallon at current exchange rates. That's what we're paying here. That's for standard lead free.

#20 ::: Andrew Gray ::: (view all by) ::: September 23, 2005, 07:16 AM:

Lizzy: Gas hit $6 (I think) in some areas, very briefly, just after Katrina hit - I can't remember if that was Georgia or not, but it was that area (southeastern US somewhere). Might be a reprisal of that, or simply a report of the same thing surfacing again.

#21 ::: Graydon ::: (view all by) ::: September 23, 2005, 07:25 AM:

Replacement price for gas would be about 25 USD per gallon.

The entire combustion economy is based on the idea that burning through capital like a drunken sailor with a known terminal illness is a sound business plan. (It's also a good check for whether you're dealing with a capitalist or a corporatist or a minion of the vice of greed; only the former is going to be clear that the practise is folly.)

Gas at fifteen dollars a gallon would be, long term, a very very very good thing; it would get us off the combustion economy. (Which neither our lungs nor the atmosphere can long hope to withstand.)

#22 ::: fidelio ::: (view all by) ::: September 23, 2005, 07:44 AM:

Lizzy Lynn, I have to admit I'm obsessed as well, and doing research helps to distract me. As for why I'm obsessed--it's not the tornado that went past both my office and my house, or the ice storm several years before that, which left us without electrical power for over two weeks, or the years in Iowa when I was in college (even that far south winter isn't playing games).

It's because I'm a primate, and the primate on the plains of Africa that didn't pay attention to weather didn't survive to have ice age descendents, who, if they didn't pay attention to the weather, didn't survive to have descendents who could farm and raise livestock in the Bronze and Iron Ages, who, if they didn't pay attention to the weather, didn't survive to have descendents who could live and work in climate-controlled environments, where they could tell themselves weather wasn't going to be a problem for them (they're wrong, of course). All those generations tend to trump a few decades of air conditioning and central heat, at least in my family's case.

#23 ::: S. Dawson ::: (view all by) ::: September 23, 2005, 10:08 AM:

No time to read the other comments--my family spent 10 hours trying to evacuate by what we thought was a little-known farm to market road and only got as far as Katy (a Western suburb). With only half a tank left and no chance of getting anywhere, we turned around and came back. We're not in a mandatory evac zone, but are right on the edge of the hundred year floodplain. The people who have run out of gas on the side of the road... I don't even want to think about it. There were two good Samaritans giving out glasses of ice water along the evac route--God bless them. It was 100 degrees out there and we had the air conditioning off to save gas. There is no gas anywhere near here.

Since it's turned north some though, we should be okay.

#24 ::: Tiger Spot ::: (view all by) ::: September 23, 2005, 10:57 AM:

My parents live in Beaumont, TX, which is more-or-less on the TX/LA border, more-or-less on the coast.

My mom is on her way to Dallas with the neighbor's cat.

My dad is staying because he works for a refinery and they need people to stay and shut it down.

The neighbor is staying because he's got some high position in the Parks Department and they want people to stay and keep an eye on things.

I am very nervous.

#25 ::: Lizzy Lynn ::: (view all by) ::: September 23, 2005, 11:03 AM:

fidelio said: It's because I'm a primate, and the primate on the plains of Africa that didn't pay attention to weather didn't survive to have ice age descendents, who, if they didn't pay attention to the weather, didn't survive to have descendents who could farm and raise livestock in the Bronze and Iron Ages, who, if they didn't pay attention to the weather, didn't survive to have descendents who could live and work in climate-controlled environments, where they could tell themselves weather wasn't going to be a problem for them (they're wrong, of course).

Exactly so. That's why I mentioned the orangutangs.

I heard on news this morning that people on the Texas highways are running out of gas and water. Did I mention that it's 100 degrees out there? It's raining in NO and water is coming over the levees that protect the Ninth Ward. There was talk of loading up busses with gallons of water and taking it to the folks on the highways. Last I heard the state was calling for volunteers to load the busses (which will presumably be able to drive along the shoulder...?) And I am sure you have all heard about the vehicle that burned with 24 elderly people in it. Shit, shit, shit, shit. Sorry.
I have a very bad feeling about this.

#26 ::: Tracie Brown ::: (view all by) ::: September 23, 2005, 11:15 AM:

By the way, I heard from an acquaintance today -- who heard it from a family member -- that gas in Goergia is costing $7 a gallon. Has anyone else heard this?

At this point, pure urban legend. After Sept 30, who knows? Right now gas here in Athens is well under $3/gal, and it's even lower in Atlanta. I paid $2.58 yesterday. If gas were selling for much over $3/gal anywhere in Georgia, someone would already have reported it to The Authorities (tm), who would have gleefully made an example of their violating this state anti price-gouging order and this temporary gasoline tax suspension.

Last week The Authorities (tm) breezed through Athens and caught 5 or 6 stations violating one or both of the orders by charging $2.96-2.99/gal. Fine were levied, examples were made, and everyone, even the non-violators, lowered their prices.

After Sept. 30? Well, that's when the gas tax suspension is lifted, and prices will immediately jump aboud 15 cents. Unless Gov. Sonny decides the extend the order. As a consumer, I'd like to see it extended. As a public servant, I'd like to see the tax revenues restored. It's never an easy decision.

#27 ::: James Angove ::: (view all by) ::: September 23, 2005, 11:33 AM:

Kris Alexander is a Texas Emergency Managment (well, City of Austin, now, but formerly State of Texas) guy, who has a fairly interesting blog.

http://alexandertheaverage.blogspot.com/

#28 ::: Keri ::: (view all by) ::: September 23, 2005, 11:46 AM:

I'm an obsessive reader here - the news seems to filter here first, so here I am again.
My parents are in southeast Houston; my brother, his girlfriend, and her family are north of Beaumont. Neither group is leaving, both have boarded up and battened down (patio furniture is in the pool).
They seem to be optimistic (stocking up on batteries, water, chocolate, and beer), and trying to evac now is obviously a bad idea. I'm just keeping my hope afloat and reading all the news. (And having flashbacks to Alicia in '83. I was 6. My memories may be slightly out of scale.)
Thank you for keeping the information and the conversation flowing. I really appreciate having this resource, and never moreso than in the last few months.

#29 ::: Lila ::: (view all by) ::: September 23, 2005, 11:51 AM:

Hey Tracie--I'm in Athens as well. Small world.

I plan to fill up both my vehicles today.

#30 ::: Dave Bell ::: (view all by) ::: September 23, 2005, 12:53 PM:

There were reports, immediately after Katrina, of $6 petrol somewhere in Georgia. I recall seeing a photograph.

A couple of months back, here in England, a rural filling station set their price at just over GBP1 per litre, about GBP0.12 more than urban prices at the time.

Yes, local taxation is a factor. We pay a lot of tax, here in the UK.

#31 ::: Stefan Jones ::: (view all by) ::: September 23, 2005, 01:07 PM:

The Northwest appears to be in a cheap gas bubble. I filled up in Beaverton, OR for $2.68 / gallon.

#32 ::: Leigh Butler ::: (view all by) ::: September 23, 2005, 01:29 PM:

CNN says the levees in New Orleans are overflowing. Again. I wonder if my father left the city again or not; I haven't been able to reach him in a couple of days.

On the subject of gas, here in Los Angeles, regular unleaded is going for between $2.90 and $3.05 a gallon, depending on where in the city you are. So that Georgia story must be total bullshit; if anyone was going to have ridiculous spikes in gas prices, California would be first.

#33 ::: Stefan Jones ::: (view all by) ::: September 23, 2005, 02:15 PM:

Leigh:

Remember that California gets its gas from specialized refineries. Those wouldn't be effected by SEastern weather.

#34 ::: fidelio ::: (view all by) ::: September 23, 2005, 02:15 PM:

Leigh, have you got even a single fingernail left, or are you working on the knuckles by now?

Gas seems to be running from around $2.69 to $2.79/gallon for unleaded regular, here in Nashville, with some slightly higher spikes.

Georgia's gas problems were more a function of which branch of the great gas-and-oil pipelines they happen to be on--the extreme southern branch was shut down after Katrina. Either it's open again, or supplies have been diverted from another route. California has its own refineries, and so is only affected by overall shortages in supply and increased price of crude, not by the loss of local refinery capacity.


#35 ::: Jackie M. ::: (view all by) ::: September 23, 2005, 05:22 PM:

Currently, Shell's advisory price in the Netherlands (probably not the price at the pump, because owners are free to sell at their own price) is 1.49 euro a litre, that's 5,64 euro a gallon, currently 6.85 dollar. ... Eep! I guess we do pay a lot.

But it only takes, what, 4 hours to cross the country by automobile? So it's not such a big deal, practically. Eh, you could probably do it on a tricycle if you had to!

Gregory's 2:30 CDT report is still seeing the possibility of a re-intensification after the weekend. I really, really hope that goes away.

And what is up with the director of the NHC and the claims that all this has nothing to do with global warming? Nothing? "We need more study"? This all sounds very familiar... Why do I smell an oil industry agenda?

#36 ::: Linkmeister ::: (view all by) ::: September 23, 2005, 05:40 PM:

Hawai'i Gas Prices. $3.15 - $3.99. Oahu is cheaper than the outer islands, because Chevron and Tesoro or whoever each has a refinery here.

#37 ::: P J Evans ::: (view all by) ::: September 23, 2005, 06:22 PM:

headline at LATimes.com:

Bush Keeps High Profile Amid Disaster Planners

I guess experience does make a difference.

#38 ::: Jackie M. ::: (view all by) ::: September 23, 2005, 06:49 PM:

Answering my own question (sort of): Oh.

Well, in that case, I guess the climate gurus can research away to their hearts' content. I'm all for cold, hard science.

But really, would it kill them to suggest signing onto the Kyoto accords? (Or just get them fired?)

#39 ::: Leigh Butler ::: (view all by) ::: September 23, 2005, 07:47 PM:

Stefan Jones says:

Remember that California gets its gas from specialized refineries. Those wouldn't be effected by SEastern weather.

Oh? Oh.

Nevermind then. Though I wouldn't put it past them to spike their oil prices anyway.

fidelio says:

Leigh, have you got even a single fingernail left, or are you working on the knuckles by now?

Because of my dad? I'm not really that worried. Maybe I should be, but where he was staying last time we spoke is the closest thing to high ground that New Orleans has. I'm pretty sure he can handle himself.

I'm honestly more worried about my mother, who is slowly going stir crazy in Arkansas. They were about to leave when Rita happened; now there's no point until the fresh evacuation madness dies down. A month in a motel room may beat the same in a hurricane shelter, but not by much.

If you meant the fingernail-chewing because of the city, well. I think I've more or less exhausted my worrying reserves this past month; even though I know it's flooding again, I can't seem to feel much more than weariness about it. I can't imagine what it's like for people who are actually there.

#40 ::: adamsj ::: (view all by) ::: September 23, 2005, 08:46 PM:

Leigh,

What part of Arkansas? We're in Hot Springs, and know people all around. It's possible we could come up with some form of diversion for her that doesn't involve prank calls.

#41 ::: John Lansford ::: (view all by) ::: September 23, 2005, 09:56 PM:

The only item I've seen about rising gas prices is the possible consequence of Rita hitting Galveston/Houston and all their oil refineries. That area has 25% of the total US refining capacity, so a hurricane that knocked them out would spike gas prices catastrophically, up to possibly $6/gallon.

However, the area around Beaumont also has several refineries, but not nearly as much of the total capacity as Houston has. But, Rita is moving through an area with oil platforms and no doubt will knock several of them out, and refineries in and around Galveston and Beaumont shut down a few days ago to get the machinery cleared and personnel safely away.

I'd say the days of $3+/gallon gasoline are about to return very shortly.

#42 ::: Paula Helm Murray ::: (view all by) ::: September 24, 2005, 12:38 AM:

One of my life-partners is in a business who's lifebood is petroleum-based resins (if you own a Colgate-Palmolive cleaning product with a spray head, the spray head was manufactured in Grandview, MO). They're talking about how long they can keep production going... those resins are on short supply now. And she's not sure they have any kind of loss-of-busiiness insurance for non-hourly employees. Meep.

#43 ::: Tiger Spot ::: (view all by) ::: September 24, 2005, 01:25 AM:

So my dad, who works in a refinery, did in fact evacuate after shutting down the refinery.

This is the only time, ever, that that particular refinery has been shut down.

#44 ::: Lucy Kemnitzer ::: (view all by) ::: September 24, 2005, 04:06 AM:

Oahu is cheaper than the outer islands, because Chevron and Tesoro or whoever each has a refinery here.

The presence of refineries doesn't help California gas prices. The Bay Area has a bunch of refineries and the gas prices there are consistently higher than they are in, for example, the Valley, in places where there are no refineries.

Sometimes I think that corporations play with pricing structures just to see what they can get away with, experimenting, rather than responding to any of the textbook factors.

#45 ::: Jo Walton ::: (view all by) ::: September 24, 2005, 09:15 AM:

Lucy -- the first time I visited Canada, I was astonished to find that everything cost half what it costs in Britain. Half. Everything. Including things exported from Britain to here. Previous to that, I had believed that prices had something to do with the value of the thing, rather than being almost entirely a case of what people were prepared to pay.

#47 ::: bryan ::: (view all by) ::: September 24, 2005, 09:48 AM:

well come on the prices have something to do with
1. the cost of a thing
2. various taxes placed on a thing
3. general overhead of maintaining system for you getting things or having things sent to you.
4. how much people are prepared to pay above these other three things

#48 ::: Carlos ::: (view all by) ::: September 24, 2005, 10:29 AM:

Lucy, they certainly do that. Modern pricing strategies often have little to do with the idealized intersection of supply and demand curves so beloved of undereducated propertarian social engineers.

They're not in introductory textbooks, though. You have to dig through the specialist literature. Neat stuff.

#49 ::: Clifton Royston ::: (view all by) ::: September 24, 2005, 02:37 PM:

Lucy:

Seconding what Carlos said, what you learn in introductory microeconomics, and the logic presented as the reason "an unfettered market has maximum efficiency" turns out to be largely, uh, unfettered from reality, except perhaps in the case of true commodity products (e.g. bulk resistors, wheat by the ton.)

Both in theory and in practice, pricing in the modern world has little or nothing to do with production costs - except as a floor, and sometimes not even then. It has to do in part with "what the market will bear", but a lot of it has to do with price signalling.

Price signalling includes both signalling to other competitors - which is the major way oligopolies jointly set prices without explicitly colluding - and signalling value messages to customers.

Examples of the former: Each of the two refineries on Oahu owns gas stations and controls the price of gas at their own stations. The executives of each refinery can thus see and compute the bulk gas price the other has set while driving to and from work. If one raises their prices a few cents, the other can see and adjust their prices the same day or the next day. No overt collusion is required, but they can jointly control the local sale prices. That is how the Chevron refinery here could charge high prices for decades "because it's so expensive to refine oil here" while shipping out huge quantities of gas by tanker from Hawaii to California where they sold it for less. Funny how those shipping costs to California can be negative, when shipping to the adjoining islands is so expensive! Airlines do the same signalling with posted pricing on certain routes, manufacturers of consumer goods do the same thing with various models. The demand-supply models of pricing make an explicit assumption that this does not happen, but in reality it's going on all the time.

Example of the latter (consumer signalling): iPod pricing. Apple produces these beatiful fetish design objects, and sets the price a little bit higher than most of the equivalent-featured competition. According to simplistic economic theories, that should lower their sales, but instead the iPods take 80% of the market with a very healthy profit margin. That's in part because the higher price is read as a signal that the object's value is higher. Heck, I want one myself! (If this sounds semiotic, it's because the semioticians were on to something.) Likewise, consultants and contractors to businesses must be wary of charging too little - charging less than the "going rate" may cause your clients to see you as less competent.

Last, remember what I said about cost not even being a floor? In the tech world, it's not uncommon to introduce new products that initially sell at a loss, and plan on making a profit only if production costs fall due to an increased sales volume or dropping parts costs, or from ancillary sales.

Example: Microsoft XBox. It was reliably estimated that at its introduction it was selling for about $100 loss per unit - $400 of parts, manufacturing, and packaging, selling for around $300. Microsoft planned on selling enough games per box to break even on the royalties, and on keeping on selling the machine until the parts had dropped in cost. Now the XBox sells for around $200, and Microsoft is probably making a profit on the original hardware because the cost of every component has dropped so much.

OK, sorry for the long essay; this is probably more than you wanted to know. FWIW, I've never gotten heavily into economics or marketing; most of this is learned from some mid-level economics and business classes, and from digging into my experience in business to figure out "why does this work this way?" The answer is that it does not work at all as the micro-theorists suggest.

#50 ::: Skwid ::: (view all by) ::: September 24, 2005, 07:44 PM:

So Dallas is dry. Completely and totally dry. Everybody was terrified about the drenching we'd get, given how drought-stricken the area has been, and now everybody seems to be slightly annoyed that we're not going to see a drop of rain from this monster storm, and probably won't see any rain for the rest of the week!

I just saw a local meteorologist say "Baton Rouge got 12 inches of rain today, a whole foot...I wish we could have moved some of that up here."

#51 ::: J Me ::: (view all by) ::: September 26, 2005, 06:06 PM:

You probably haven't noticed, but Cameron Parish took the brunt of the storm. I'm sick of hearing how wonderful it is that Houston and Galveston weren't hit. In 1957 my home was washed away by Hurricane Audrey. Rita was worse than Audrey, except that almost everyone was able to get out, so the loss of life was minimal.

My sister from New Orleans had evacuated to my parents' home in Grand Chenier; they left for Morgan City last Wednesday. Now there's nothing to go back to, and they may not be able to re-build. My sister's home in Gentilly is lost, and she and my parents are now homeless, but I bet this won't be making the national news.

I don't really care about the refineries; the storms just hastened what was bound to happen anyway. I do care that the losses of the people of Cameron parish won't be mentioned.

#52 ::: P J Evans ::: (view all by) ::: September 26, 2005, 06:30 PM:

J Me: You aren't looking very hard. It's all over the news. With pictures.

#53 ::: Leigh Butler ::: (view all by) ::: September 26, 2005, 06:50 PM:

adamsj says:

What part of Arkansas? We're in Hot Springs, and know people all around. It's possible we could come up with some form of diversion for her that doesn't involve prank calls.

(Sorry, weekend computerlessness strikes again!)

Well, it's a moot point now, but they were somewhere right outside Little Rock.

As of yesterday, though, all the family in Arkansas has relocated to Picayune, Mississippi, where the family summer house is miraculously intact (as long as you don't count the entire back porch-and-deck being reduced to splinters by a fallen tree).

Your kind offer is very appreciated, though. I've been to Hot Springs once; it was a cool little town from what I recall.

Everyone in my family who was in Arkansas, by the way, kept going on about how wonderful everyone there had been to them, how generous and welcoming they had been. So, y'all can be very proud of how your state comported itself in the aftermath of all this crap. Just thought I'd say.

#54 ::: Marilee ::: (view all by) ::: September 26, 2005, 07:26 PM:

J Me, it was above the fold on the front page of today's WashPost.

I'm sorry to hear about your family.

#55 ::: Erik V. Olson ::: (view all by) ::: September 26, 2005, 07:56 PM:

How bad?

Look who got rehired.

The Onion might as well fold.

As to Rita, the hurricane that would stall over Texas, it dumped about 4 inches on St. Louis as it headed towards Detroit. Given the Mississippi/Ohio valley drought, this was a good thing.

#56 ::: Lin Daniel ::: (view all by) ::: September 26, 2005, 09:20 PM:

foxnews.com reports the following:

Brown is continuing to work at the Federal Emergency Management Agency at full pay, with his Sept. 12 resignation not taking effect for two more weeks, said Homeland Security Department spokesman Russ Knocke.

During that time, Brown will advise the department on "some of his views on his experience with Katrina," as he transitions out of his job, Knocke said.

The same link's opening paragraph reads:

Former FEMA director Michael Brown said Monday he should have sought faster help from the Pentagon after Hurricane Katrina hit, and blamed state and local officials for failing to order an immediate evacuation of New Orleans...

The questions I (still) have are:

1) Why ask help from the Pentagon? Why not accept all the help that was being offered?

2) What is the criteria for "immediate" in "order an immediate evacuation"? "Immediate" works well in the present tense because the point of application is now, but becomes a great "sounds good but means nothing" word in the past tense because the point of application becomes a moving target if no time frame is specified.

(These are rhetorical questions, for those who may miss that.)

(Or at least questions that cannot be truly answered by people who read this blog.)

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