Summer 2004:

Here in New Orleans everything is great.  We’ve got a great tourism industry, the Superdome, and a vibrant economy.  We don’t have to worry too much about hurricanes because of the sophisticated levee system constructed in 1850 by beavers and not since kept up.  Living under sea level is great!

Summer 2005:

Oh………. $#!+

Summer 2006:

Living under sea level was a terrible idea.  If the sea level rises, New Orleans goes the way of Atlantis.  There are only a few people returning, New Orleans may never be the same.  Some lost everything.

Summer 2007:

Citizens have returned.  We are rebuilding the city to be better than ever.  Those same beavers have made the levees stronger than ever, but Katrina was a one in 100 years incident.  We don’t need to worry about it for a while.  Living under sea level is great!

Summer 2008:

You’ve got to be joking!  Gee, how could it happen again?  Kids pack your crap, we’re going to stay with your dad in Houston for a few days.

Gustav was a bittersweet hurricane.  It was great because the damage seemed to be light, bad because all the media folks sent there seemed to survive the storm too.  Oh well, maybe next time we’ll get them.

Aside from the joke that is “living in New Orleans” Gustav is a symbol of something important to all us Weakonomists.  The price of oil tanked once people realized the hurricane didn’t really do any damage.  I watched the price dip as low as $107 on Tuesday.  Expect a rebound later this week heading the price back up a bit, but by the end of September we might see a dip below $100 again.

The point of my headline was that Gustav was the final straw in 6 months of hell with our gas prices.  Speculators drove the price to within inches of $150, and enthusiastic analysts said $200 was reasonable.  I hope you’ll realize that the analysts don’t know any more than you do.  When the media reports on “analyst opinions”, keep in mind we’re all analysts.  If the analyst is so sure about $200 a barrel, he’d quit his job and dump all his money into oil futures and retire.  You’d never hear from him again.  But he’s not sure.  In fact, he was just wrong.  The speculators from hedge funds to pension funds and whatever is in between (not much) have left the oil market for now.  They’ll move on to copper, orange juice, or slavery, whatever commodity is hot this month.

They’ll also be putting a lot of their money back into the stock market.  If there is a bottoming out of the market this year, the August/September time frame might be it.  If the banks are able to not make fulls of themselves in the third quarter, look for the stock market to have a nice rally to wrap up 2008.

I’m merely guessing of course, but you just can’t get enough of that can you?

Read about oil and Gustav

Related posts:

  1. Weakonomics Economic Review of the First Half of 2008
  2. Weakonomics Weekend Edition: Holy Terrible Week Batman
  3. Weakonomics Best of 2008 Awards
  4. The Flaws of the Clinton Gas Tax Holiday
  5. Media Covers Oil, Ignores Elephant in the Room

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