The full extent of the Gulf of Mexico energy infrastructure is hard to grasp. Altogether, about 800 manned platforms, plus several thousand smaller unmanned platforms, feed their oil and gas into 33,000 miles of underwater pipelines, a good part of which eventually reaches shore at Port Fourchon at the mouth of the Mississippi. That adds up to 35% of domestic oil production (including oil from state as well as federal waters) and over 20% of our natural gas coming from off-shore. Add to that the 10% of U.S. oil imports that flow in through the same corridor, plus the string of refineries and pipeline networks that sprawl along the Gulf Coast, and you have a complex that constitutes our single most important energy asset.
In addition, New Orleans is the major transfer point for North American grain floating on barges down the Mississippi River. The Wall Street Journal reported on September 2 that Cargill alone had 300 barges holding grain, salt and fertilizer stranded on the lower Mississippi. Each barge is capable of holding 55,000 bushels of grain, as much as 60 semis.
"By closing the New Orleans ports, Katrina effectively eliminated the cheapest way for American industries in the nation's heartland to do business overseas. Some economists figure that the competition of the river-barge industry with the railroads and trucking companies saves companies roughly $1 billion annually.
Agriculture-industry officials say other U.S. ports simply don't have the capacity to absorb the two billion bushels of grain that move annually through New Orleans. "The ports in the rest of country are already at capacity," said one federal official.
Other damaged ports in the area compound problems. According to an article in the September 1 New York Times, Chiquita Brand's facilities in Gulfport, Mississippi, which last year handled about 25% of its banana imports to the United States from Central America, were too damaged to receive shipments.
The distribution problems in particular highlight the interconnectedness of the global economy, and vulnerabilities that loom large in very specific areas. The port of New Orleans, like that of Los Angeles and elsewhere, is a super-connector in the global economy. (See an earlier blog item for more on the L.A. port; also, "Networks and Globalization"). The global transportation system is not a particularly robust network. The cost (both financial and political) of adding new ports (i.e. nodes) capable of handling today's super-tankers and super-container ships means that the failure of any one node (whether by hurricane, dirty bomb or strike) can have a powerful impact, as options for re-routing traffic are limited.
In the energy distribution system, the Straits of Hormuz represents the biggest chokepoint (15 million barrels of crude pass through it every day, 10 times the daily production of the Gulf of Mexico platforms). The scramble to build redundant and/or politically secure pipelines and tanker ports in the Middle East, Caucasus and Balkans explains much about global politics.
Daniel Yergin points out in the article cited above that since 1973, U.S. strategy for energy security has been securing sources of oil, and policy from support for Israel and the Saudi royals to the 1991 Gulf War and the takeover of Iraq relate to this goal. A new security model is needed, Yergin argues:
But a host of developments -- from terrorism to the California power crisis to the East Coast blackout to Katrina -- have emphasized a return to what might be called the World War II model of energy security, assuring the security and integrity of the whole supply chain and infrastructure, from production to the consumer. (The gravest energy threats during World War II were when Nazi U-boats came close to cutting the tanker pipeline across the Atlantic that supplied U.S. military forces). This more expansive concept of energy security requires broader coordination between government and the private sector; more emphasis on redundancy, alternatives, distributed energy and back-up systems; planning and pre-positioning of vital supplies ("strategic transformer reserves" for electric substations); and methods that can quickly be applied to promote swift market adjustment. As with the August 2003 blackout, this crisis underlines the need for modernization and new investment in the energy infrastructure that supports our $12.4 trillion economy.
That is, expanding the energy network in various ways to provide robustness. The same could be said for other transportation systems. An interesting challenge will be that, while historically the government has provided the coordination and funds to ensure that infrastructure is modern, adequate and maintained, in the era of neo-liberalism that support is withdrawn. Just as the levees of New Orleans were left to sink or wear out or whatever exactly happened to them, because the money disappeared in tax cuts to the rich or went to pay for the war in Iraq, so the general infrastructure of distribution is more or less ignored. This provides a crisis not just for the worker/consumer/unpropertied, but also a crisis for sectors of Capital that require the infrastructure for the extraction of surplus value and profit. In the absence of a broad class-based movement for change, the differences within the capitalist class provide the engine for politics. So it will be interesting to see what comes of Katrina in the halls of Congress.
jd
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