Goods From Gulf Will Cost More

The Memphis Commercial Appeal ^ | September 18, 2005 | Maria Burnham

[mcg2000]

Goods From Gulf Will Cost More: Yes, we have some bananas -- costly ones; same for shrimp and coffee

By Maria Burnham/ September 18, 2005

Despite the signs in some grocery stores around the Mid-South, residents shouldn't be too worried about the supply of bananas, shrimp and coffee.

But they might raise an eyebrow or two at the price.

Economists, wholesalers and restaurateurs predict an increase in the price of tropical goods that typically come through the Port of New Orleans and seafood that comes from the Gulf Coast, but say it will only be temporary and that supply shouldn't be a problem.

"From talking to some wholesalers around the state, there aren't any shortages that they know of," said Jarron Springer, president with Tennessee Grocers and Convenience Store Association.

"There may be items that are harder for retailers to get and that might drive prices up some, but it will only be temporary. There are other places to get supplies."

Those other places are primarily Texas and Florida, through which seafood, pineapples and South American coffee will now flow.

For a few weeks prices may be higher than usual as the new logistics of shipping from those ports to Memphis are worked out, but after that the consumer shouldn't notice a difference, Springer said.

Seafood supplies, especially oysters grown in Louisiana and Mississippi beds and shrimp that were stored in Gulf Coast warehouses, have tightened up and driven prices up, said David Feinstone, owner and president of Off The Dock seafood in Memphis.

Oysters should be the only seafood that is hard to find, he said. The storm knocked out many of the suppliers and contaminated waters have closed a wide swath of beds.

But things are already starting to get back to normal, he said.

With gas prices at or just below all time highs, normal will likely mean more money than it did at this time next year, said John Norris, chief economist for Morgan Asset Management.

"You can import (products) through another port ... but it will take a little extra time. If you are using more time, you are using more money, which means it costs more for the consumer."

Memphians will probably see the higher gasoline prices reflected in what they pay for food.

"The gas price is going to affect everyone," said Jeffrey Dunham, chef and co-owner of The Grove Grill and president of Memphis Restaurant Association.

Delivery costs are up and those costs may find their way into menu prices. But the biggest hit will probably come this winter.

Heating costs to rise

As demand increases during the winter for heating -- the majority of Memphis restaurants use natural gas for heating and cooking -- the cost of a meal out will likely increase as well.

"We took a hit last year and we're going to see our prices go up again this year," Dunham said. "It's a big concern and it's going to trickle down to the customer."

The hurricane caused a further spike in energy prices due to widespread shutdowns of oil and natural gas facilities in the Gulf Coast region. While crude oil and gasoline can be imported and obtained from reserves, natural gas shortages cannot be as easily made up.

The Energy Department estimates natural gas prices could rise as much as 71 percent in the Midwest this fall -- the area expected to get the coldest temperatures. Electricity prices in the South could increase by 17 percent.

Measuring the impact

It's hard to gauge the overall economic impact of Hurricane Katrina because there is no similar, previous experience to base it on, economist Norris said.

"For people in my industry, trying to get an idea of what impact this will have on the economy, we're just guessing."

Norris and other economists have guessed that consumer demand will probably dry up in September and October and leave disposable goods retailers with unusually low numbers through the holiday season.

In the long term, there will be some economic bounce back as reconstruction gets underway.

But economist are at odds on whether construction will make up for the other losses in consumer spending. Some wonder if there will be much rebuilding at all with evacuees already settling into their new cities.

Region could suffer

Nationwide, things will likely return to pre-Katrina status in one or two quarters. But regionally, the economy will continue to be impacted by high gas prices and the loss of jobs and industry, Norris said.

Estimates range between half a million and a million people out of work in parts of Louisiana, Mississippi and Alabama.

Rebuilding oil facilities and ports will eventually bring back jobs. But small businesses face a precarious future in the storm-hit areas, if they have a future at all.

"I don't see a lot of good things in the future for New Orleans," Norris said, "which doesn't really bode well for Memphis."

-- Maria Burnham: 529-2320

[stockpirate]

Gasoline yesterday hit $2.43, down from $3.06 just a couple of weeks ago. Oh, northeastern Oklahoma.

BTW, GWB won every county in Oklahoma!

[cripplecreek]

Of course things will cost a bit more but I suspect it will be temporary.

[stopem]

Our electric bill here in Texas was over $300 due to having to use our air conditioner in the heat of summer. The electric company just recently raised rates.

I won't be having shrimp for a long time to come with all the talk of contaminated waters so I really won't be affected by the raise in price of that. Even tho they said most of the shrimp had been frozen prior to the hurricane, it's just the thought of it.

[lionheart 247365]

Pray tell !.