Rita Madness

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"This
was the largest evacuation in American history, and it went rather
well. Next time, if we have to do it again, hopefully we can do
it even better."

~
Texas Governor Rick Perry

It
is not everyday that one gets to witness firsthand the evacuation
of 2.5 million people from an area the size of Rhode Island. Lew
Rockwell asked that I share the experience:

Texans
packing heat

For
the most part, the authorities had enough sense not to enforce mandatory
evacuations. This is Texas. Force someone to vacate their property
and you're likely to get shot. As a politician, you are not likely
to get re-elected. In Galveston, originally thought to be Ground
Zero, roughly 5% of the residents ignored orders to leave and battened
down the hatches. A.R. "Luke" Lucas of Luke's Caterers
vowed to stay open as long as the electricity stayed on, selling
bottled water, beer, soft drinks, hot food, and other goods like
batteries. Lucas couldn't understand all the praise he received
from the 5,000 or so hearty souls who remained. He revealed his
primary motive to the local press: "I'm helping myself."

Texans
cherish the 2nd amendment. Anyone who had stepped foot
in this state longer than a month knew there would be no repeat
of the New Orleans looting spree and that it would be safe to ride
out the storm. A well-armed man (who wishes to remain anonymous)
west of Houston stayed behind, as did most of his gun-toting neighbors.
On Thursday night four men tried to break into one of the few vacant
houses, inadvertently setting off an alarm. One of the armed residents
chased them away.

The
eye of the storm: hysteria

Houstonians
went from complacency Monday and Tuesday to pure panic Wednesday,
the day Rita was upgraded to Category 4 and then 5. With Katrina
fresh on everyone's mind and the press and public officials urging
evacuation 24/7, fear took over. The old bromide "run from
the water, hide from the wind" was forgotten and people as
far as 100 miles from the coast hit the eject button.

Oddly,
gasoline prices remained flat despite the new reality that demand
was increasing and supply limited to the existing gas in underground
tanks as the nearby refineries to the south and southeast were being
shut in. It was as if the laws of supply and demand were suspended.
In fact they were not, just ignored by an energy industry already
under attack before Katrina. By the time Rita approached,
anti-gouging hysteria had gripped Washington: there was talk of
a federal price-gouging law, threats of resuscitating the dreaded
"windfall profits tax," and the unveiling of a new
gas gouging hotline
compliments of the Department of Energy.
To make matters worse, Texas is one of over 20 states with an anti-gouging
statute. Predictably, gas lines formed, fights broke out, and by
Thursday the entire city was bone dry, not a drop to be found.

TSA:
MIA

The
airports were a zoo on Thursday. The bottleneck was clearly the
Transportation Security Administration (TSA) screeners who, like
half the New Orleans police force, flew the coop when the going
got tough. Security lines were three hours and longer. Private sector
employees — flight attendants, ticket agents, baggage handlers,
and pilots — all heeded the call. My business partner and I were
scheduled to fly to Phoenix 11:45 AM Friday, well before the brunt
of the storm was expected to hit Houston early Saturday morning.
Our flight was cancelled.

About
1,100 Katrina evacuees (down from a high of nearly 10,000) housed
at Reliant Arena and the George R. Brown Convention Center became
precious political cargo. They
were bused south to Ellington Field and flown out to Fort Chaffee,
Arkansas.
Most were frustrated, some were bitter, and one was
even disoriented: "I don't even know where that's at."
(Hint: try just north of Louisiana.)

Declare
success and form a study commission

The
evacuation of coastal areas began immediately and proceeded in an
orderly manner Monday and Tuesday. Residents of Houston (4th
largest city in the country, population 4.7 million) started hitting
the exits Wednesday en masse, creating the mother of all traffic
jams. 100-degree heat and 90% humidity only made a bad situation
worse as people turned off their air conditioners and in some cases
pushed their cars in order to save gas. Contra-flow lanes were not
opened until late Thursday afternoon. A trip to Austin along 290,
normally 2 hours, took 12 to 16 hours. A leisurely 4-hour drive
to Dallas on I-45 turned into a 30-hour ordeal.

The
Houston Chronicle set up an online forum to discuss Hurricane
Rita.
There were many reports of small town residents bringing
food and water to the weary and a few cases of police getting in
the way or failing to clear accidents quickly. One evacuee wrote:

"If
I learned anything about this situation it is don't trust the
government and they are the last ones to depend on. If they didn't
block most of the stores and roadways, maybe they could have been
giving people water."

The
death toll from Rita is now up to 107

(nearly all from the exodus), ranging from a 2-year-old Houston
girl crushed by a pickup truck to a 92-year-old La Marque woman
who lost consciousness while stuck in gridlock. The driver of the
truck was a 64-year old man who fell asleep after 20 hours on the
road. This pressure cooker literally exploded just south of Dallas
Friday morning as a bus inferno claimed 23 elderly from a nursing
home in Bellaire. Houston Mayor Bill White conceded, "I don't
think the evacuation should be a disaster in itself."

Government
officials claim the evacuation went as well as can be expected.
(On this point classical liberals and Austro-libertarians would
agree.) A dedicated Republican, who spent 4 hours to cover 11 miles,
then scampered home before she and her husband ran out of gas, gave
the officials a "B" for their efforts. The evacuation
left hundreds of thousands unable to escape, deposited hundreds
of stalled cars alongside the roads, and boasted a fatality rate
of 1 in 25,000. What constitutes a failing grade?

Trials
and simulations

What
could have been done to improve the evacuation process? According
to Alfredo Calzadilla, civil engineer with 50 years experience and
chief architect of the first highway connecting Venezuela and Brazil,
plenty. But it would have required effort and planning, both clearly
lacking. According to Calzadilla, the theoretical capacity of a
highway is 2,000 vehicles per hour for each lane. This assumes no
trucks, no curves, no grade, and ample lane width to facilitate
passing. I-45 to Dallas is flat as a pancake and straight as an
arrow, constituting a high "level of service." Under these
conditions, practical capacity is closer to 1,500 vehicles per hour.

What
would it take to maximize the flow of traffic through the various
arteries and capillaries out of Houston? The immediate use of contra-flow
lanes is a no-brainer. "Ramp metering", in which the traffic
feed into the highway system is regulated, is also important. Bottlenecks
(e.g. curves, on/off ramps) must be looked at and eliminated. This
requires the use of sophisticated traffic simulation software (widely
used SimTraffic
costs all of $500). These programs are able to simulate the effects
of gasoline consumption, auto exhaust, stop-and-go's, and even driver
lethargy (modeling the number of vehicle hours traveled) — all factors
that seemed to take officials by surprise.

How
many people could have been evacuated from Houston with proper planning?
Assuming the contra-flow lanes were open on I-10 west to San Antonio,
1-45 north to Dallas and 290 to Austin, and the average vehicle
carried three people, 1.3 million people per day could have been
evacuated along these routes. This does not include I-10 east to
Louisiana, 59 northeast to east Texas, 59 southwest to Corpus Christi,
the back roads, trains, private planes, and the airlines. There
does not appear to be a shortage of capacity, even for a massive
evacuation of 2.5 to 3.0 million people over roughly a three-day
period. Imagine if highways were privately owned. It is difficult
to fathom profit-maximizing enterprises failing to get the job done.

Greed
is good

In
contrast to the living hell on the freeways, those who remained
in Houston endured much more tolerable circumstances. The greatest
annoyance was power outages. I lost electricity for 21 hours which
was at the high end for Houston (ultimately restored by the aptly
named "Reliant Energy"). When it got dark Saturday night
(still without power), my partner and I drove around looking for
a place to eat. There were very few restaurants open and the waits
were typically two hours. We actually managed to find a place called
"Sushi King", sit at their air-conditioned bar, drink
an ice-cold Kirin on tap, and have a nice sushi dinner. I love capitalism!
It is fascinating to watch the free market respond in a crisis.
Those businesses who stayed behind and got up and running quickly
with skeleton crews and limited wares did phenomenally well… by
providing a valuable service. Good Samaritans? Hardly. More like
little Gordon Gekkos, all exploiting an opportunity.

A
good friend (and fellow investment manager) told me the fresh-made
lasagna dinner his family enjoyed at Azzarelli's Saturday night
"earned that guy a 100% tip just as my voluntary contribution
to a system we both love."

After
rationing gas for the past 6 days, I decided to splurge Sunday and
drive around in my air conditioned car (temperatures were in the
mid-90s), listen to the Eagles, and observe a city that seemed to
be just waking up from a long slumber. There was a Shell station
open near the Galleria, fortunate enough to receive the first shipments
of gas the night before from a terminal in North Houston. People
were waiting 45 minutes, some seemed edgy, and a couple of spats
even broke out. There was a huge TV crew in the adjacent parking
lot. Houston's lifeline was slowly being reattached.

The
grocery stores were beginning to reopen — Rice Saturday night, H.E.B.
Sunday afternoon, Randall's Monday, Kroger on Wednesday. I decided
to go to Rice Epicurean Market around noon Sunday to beat the rush.
Pure joy. I don't think I've ever appreciated the miracle of the
marketplace this much. Some shelves were bare, but the operative
word was "abundance". I was a kid in a candy store. The
process was relaxing and orderly. I took my time, soaked it all
in, and filled up my cart. When the hoards returned Monday it could
be an entirely different experience, like the vultures fighting
over the last scraps on a carcass. (This was, in fact, the case.)

Once
bitten…

Thankfully,
not everyone in Houston and the surrounding area listened to the
authorities. Those who discounted their advice were by far the best
off. Texas Gov. Rick Perry wanted two days to restore order before
allowing people to return to their homes and cause a repeat of the
outbound highway mess. The Texas Dept. of Transportation issued
a three-day "Scheduled
Return Plan
." This time nearly everyone ignored the officials
and drove back on their own timetables. Traffic was congested, but
nothing like the evacuation. The police were impotent to do anything
about it.

October
1, 2005

Kevin
Duffy [send him mail]
is a principal of Bearing Asset Management.

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