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Berkeley professors explore Hurricane Katrina impacts in public forum

– The impacts of Hurricane Katrina, ranging from higher winter heating fuel bills to property damage and emergency response, were explored in a teach-in at UC Berkeley's Haas School of Business on Friday (Oct. 14).

The teach-in, assembled by Richard Lyons, the acting dean of the Haas School and the Sylvan Coleman Professor of Finance, included experts from across campus in many disciplines, including civil and environmental engineering; banking, finance and real estate; organization behavior and industrial relations; public policy and architecture.

Severin Borenstein, the E.T. Grether Professor of Business Administration and Public Policy, told the audience assembled at the Wells Fargo Room at the Haas School that Hurricane Katrina had had a significant impact on oil production, with about 1 million barrels of oil - some 20 percent of the United States capacity - lost per day. While the effect is not large globally, the impact is significant nationally, particularly on natural gas production and prices as winter looms.

At this time of year, Borenstein said, refineries typically ramp up production of heating oil. With a diminished oil supply, he said, natural gas and heating oil prices will likely remain high for years to come.

The United States needs to build more refineries to enhance its oil production and supply capacity, said Borenstein, who also is director of the UC Energy Institute.

James Wilcox, the Kruttschnitt Family Professor of Financial Institutions, said there are about half a million people unemployed in the short term due to Katrina. He said that insured losses will be in the $50 billion range and uninsured losses will reach into the tens of billions of dollars. Not much of the aid from the federal government will start flowing until 2006, and it will likely continue for some years after that.

Although tourism and energy production have been disrupted, rebuilding in the Gulf Coast region will boost employment for several years, Wilcox said.

While the weather and engineering problems associated with Hurricane Katrina might have been surmountable, Professor Karlene Roberts said the organizational difficulties at the local, state and federal levels proved unsolvable until the Coast Guard and National Guard arrived on the scene.

She said authorities would be well served to explore the examples of oil companies operating in the Gulf, where they experienced no loss of life due to a steady emergency drill practice and training. Roberts is a professor in the Haas School's Organizational Behavior and Industrial Relations Group.

New Orleans suffered from a lack of training and no sense of "big picture management," she said, noting the "original liquefaction" in the disaster happened to the city, to the Federal Emergency Management Authority and to the state of Louisiana.

Nora Silver, director of the Haas Nonprofit and Public Management program, suggested that the nation has lost its focus by concentrating on terrorist threats rather than on the more likely and predictable natural disasters.

The reconstruction of New Orleans and the rest of the Gulf Coast will proceed, but it will be years before the aggregate losses are known, said Professor Mary Comerio, a renowned expert in disaster recovery. It could take five to 10 years to rebuild New Orleans, she said, and that would sound the "death knell" for local recovery.

The professor of architecture also warned that Bay Area residents, who experienced a major earthquake in 1989, "haven't had the big one . we had a little one that was (centered) 100 miles away."

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