JIS News

Prime Minister P.J. Patterson has said that the recent devastation of the southern states of Louisiana, Alabama and Mississippi in the United States by Hurricane Katrina, would have several implications for the Jamaican economy.
He pointed out that there would be spill over effects to all sectors, most notably in tourism, mining, transportation, energy, insurance and labour.
Mr. Patterson was speaking at a post Cabinet press briefing at Jamaica House, yesterday (September 5). “The damages will be of some consequence to Jamaica. Most of our products imported from the USA, such as grains and a range of raw materials come to us down the Mississippi River and from terminals in New Orleans,” Mr. Patterson pointed out.
He informed that there had already been an increase in the transportation cost of grains that would affect the price of feeds. Due to the devastation in the area, the transportation of grains would have to be diverted from the Gulf to other ports for loading.
The mining industry would suffer from the damage done to the Gramercy plant in Louisiana, which imports crude bauxite from Jamaica. The plant had already ceased operation for two days due to the passage of Katrina but has since resumed refining activities.
Approximately two thirds of Jamaica’s bauxite shipment is routed to the Gramercy plant via the Mississippi River but due to the passage of the hurricane, navigation on the river has been affected, resulting in the delay of three shipments of crude bauxite amounting to 15,000 metric tons or US$3.6 million in earnings.
Data for 2004 indicated that the USA accounted for 70.4 per cent of stopover visitors to Jamaica, with the two leading regions being the North East and Southern Regions. It is expected that although Hurricane Katrina impacted heavily on the southern states of Alabama, Louisiana and Mississippi, stopovers from the Southern region should not be greatly affected.
The transportation, storage and communication sectors have been affected primarily with respect to sea cargo movement. APM Terminals Jamaica Ltd. has advised that cargo destined for New Orleans and Mobile ports are now redirected to the port of Houston and outbound cargoes from these ports to Jamaica are largely empties.
Mr. Patterson noted that rising gasoline and aviation fuel prices would also have an impact on this industry.
Another area that will feel the effects of the damage caused by the hurricane is the insurance sector. Property insurance premiums are expected to increase by between 15 to 20 percent, due to the impact of Hurricane Katrina on the US Golf Coast. The Prime Minister noted that preliminary estimates put insurable damage arising from hurricane Katrina above the US$15.5 billion payout due to Hurricane Andrew in 1992.The premium rate in Jamaica doubled after the impact of Hurricanes Gilbert and Andrew.
In respect to oil prices, due to the fact that Petrojam uses the West Texas Intermediate (WTI) and Gulf Reference Prices as the benchmark for domestic fuel prices, the increase in these references would result in higher prices for oil and its related products on the domestic market. Hurricane Katrina has caused damage to oil rigs and refineries along the Gulf Coast of the US. Operations have been curtailed as several refinery operators assess the impact of the hurricane on offshore facilities, pipelines and ports.
Price increases are anticipated to be tempered by an expected release from the US Strategic Petroleum Reserve, which will supplement the supply of crude oil and the resumption of operation by one of the eight Gulf Coast oil refineries, now out of service, within the next two weeks.
In the meantime, Prime Minister Patterson informed that the country would be looking to assist the affected US states with any bilateral assistance that they might require. “We are looking at what personnel can be made available, which include linesmen, who could assist with the restoration of electricity transmission,” Mr. Patterson said.
He also informed that Minister of Labour and Social Security, Horace Dalley left the island on September 5 to meet and assess the needs of Jamaican citizens living in the affected areas.

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