The Ripple Effect

The little stories, many with devastating impact, that slide below the headlines often make ripples that can turn into economic tsunamis in the aggregate. Of late, I’ve trolled the news looking for those global climate change tales that have eluded becoming lead stories, but genuinely impact our daily lives. We’ve seen the crop devastation from the recent drought in our gain-producing states, wildfire damage, superstorm damage, etc… but there are impacts and ripples everywhere.

Today, I’d like to look at our Great Lakes which, despite an expectation of a rise of 2 or 3 inches from the spring thaw, have significantly lower water levels than at any time ever recorded. The Army Corps of Engineers has released the following measurements: Lakes Michigan and Huron are about 26 inches below their long-term monthly averages, and Lake Superior is about 13 inches low. So what? There’s still plenty of water left, right? Aside from the possibility that this is just the beginning of a more disturbing trend, there is a more direct and immediate problem with this fall in the water table.

Because the lakes have areas where ship traffic must pass that are reasonably shallow, these giant ships and barges have been required to reduce their cargo loads by as much as 15%. Maybe that doesn’t sound like much, but realize that there is almost the same cost of crew, ship and fuel to ship less (hence the per unit cost has to increase), and the supply reductions can also have a negative impact on manufacturing, exports, our balance of payments, improving our economy, etc. Too abstract? Okay, let’s get down into the specifics.

First, the Corps of Engineers and local governmental operations have to step up dredging efforts, not cheap under any analysis. In Michigan alone, “State officials surveyed 63 communities on their dredging costs and have asked the Legislature for $21 million. The funds are awaiting Gov. Rick Snyder's approval.” Detroit Free Free, March 25^th. Second, local harbors are facing as much as a two foot drop in water levels, reducing the number of accessible recreational boat slips that can be rented out. Michigan’s estimated loss: $850,000. Little stuff.

Back to cargo reduction. On March 29^th, CBS News looked at the problem: “The persistent drought has produced some of the lowest levels ever recorded in Lake Michigan and Lake Huron. And as a consequence, the big ships that carry iron ore to mills around the lakes are now being forced to lighten their loads - or risk running aground…  [In February,] CBS News went aboard the Stewart J. Cort in the Port of Milwaukee. As long as an aircraft carrier, the ship can carry 65,000 tons of ore. ‘When this ship loaded its last cargo of the season, it had only 55,000 tons on board,’ [a trade industry spokesman said]. If a ship is 10,000 tons of ore short, ‘that means a steel mill didn't make about 6,700 tons of steel and that could have been turned into 8,400 cars. And 8,400 cars would keep a large auto plant working for 15 days,’ he explained. ‘And you have to remember that's on just one trip. These ships will make 45 to 50 trips during a season.’” Drop the water levels even more in future years and… Well, you get it. Big stuff.

I’m Peter Dekom, and as I look at governmental priorities to find more domestic oil, I wonder who is running the dollar cost tab on all the economic damage this continued reliance on fossil fuels will actually cause.