Growing Fears Of International Energy Crisis…

Financial Times
Sep. 01, 2005

President George W. Bush on Thursday promised the US government would do everything possible to alleviate the chaos and suffering that has enveloped New Orleans and the Gulf coast in the wake of Hurricane Katrina, but acknowledged that federal and local authorities had not been prepared for the catastrophe.

As efforts continued to evacuate the flood-stricken city, which has been wracked by looting and other crime, Mr Bush said: “I don't think anybody anticipated the breach of the levees.”

“They did anticipate a serious storm,” he told ABC News.

Mr Bush said the scale of the catastrophe could exceed that of September 11 2001. “The aftermath is going to be just as serious in both cases,” he said. “New Orleans is more devastated than New York was and just as physically devastated, as is the coast of Mississippi. So we've got a lot of work to do.”

For a country that has spent the four years since September 11 preparing for another major terrorist attack, the failure to prevent or mitigate such an enormous natural disaster is likely to set off a new debate over US preparedness.

Emergency management officials in Louisiana had warned for years that New Orleans would be unable to withstand such a big hurricane, but funding for plans to strengthen the levees and prevent floods has declined by nearly half in the past four years.

The White House said the president would tour the disaster zones today, and that he had asked former presidents Bill Clinton and George Bush, his father, to lead a fundraising effort for relief. Both men led a similar campaign following the Asian tsunami last December.

Officials have confirmed that at least 110 people died in Mississippi. However, Haley Barbour, Mississippi governor, said he expected the total number of deaths would be much higher. Mary Landrieu, a Louisiana senator, said up to 100 people may have died in New Orleans alone.

The dollar fell sharply for a second straight session amid fears that the devastation in the Gulf region and the knock-on effect on US petrol prices would lead to a marked fall in US economic growth in the second half of the year.

Markets were anticipating that the Federal Reserve could be forced to pause in its rate tightening cycle sooner than expected, with the futures market yesterday retreating from an expectation that the Fed would increase rates twice more to 4 per cent by December.

Goldman Sachs warned yesterday that rising fuel prices in the wake of Katrina could cut growth in each of the third and fourth quarters of the year by at least half a percentage point. The amount could perhaps be more if petrol inventories fall so low that shortages and high prices force consumers to reduce sharply their petrol usage.