The financial impact of the worst cold snap in more than a decade is turning out to be as widespread as the freezing temperatures that have gripped much of the U.S. for the past two weeks. With the cold weather expected to continue through the weekend, economists say it’s too early to tally the cost. But the bitter cold has forced consumers, businesses and governments to stretch their budgets to cope with the deep freeze.
THE COST OF THE cold snap has been compounded by its wide reach. As temperatures again fell to below normal levels in the Midwest and New England Friday, several inches of snow blanketed North Carolina, and Florida citrus growers were bracing for another night of possible crop freeze. Weather watchers say it’s the worst cold snap in the U.S. since December, 1989.
Even Maine lobstermen, normally unfazed by cold weather, couldn’t escape the grip of this cold spell. Many of the 52 lobster boats that anchor in Cape Porpoise, near Kennebunkport, Maine were frozen in place Thursday morning.
“In a normal winter, we have some skim ice, but this? This is a real cold snap,” said Dave Billings, the Cape Porpoise harbormaster.
Shipping was slowed in New England as harbors and rivers froze over. The Coast Guard ran icebreaking ships through Massachusetts waters to make way for commercial ships, many of them carrying home heating oil to help stoke a surge in demand.
Despite strong demand for new housing, many construction projects have ground to a halt, according to Jason Bram, a regional economist a the New York Federal Reserve
“When you have weather this cold for this long the idea of the idea of laying a foundation becomes moot,” he said. “It just can’t happen.”
But by far the biggest financial impact is being felt by energy consumers, which is to say almost anyone locked under the blanket of Artic air that remained stalled over the eastern U.S. on Friday. In the Midwest and the Northeast, the biggest regional consumers of heating oil in the world, temperatures have stayed below freezing for nearly two weeks.
Energy consumers face a double hit. Not only are they burning more heating oil to stay warm; they’re paying more for each gallon. Oil prices have soared in recent weeks based on higher demand, as well as jitters over a possible war with Iraq and a general strike in Venezuela that has cut production.
On Friday, the Bush administration authorized the release of $200 million in emergency aid to help poor Americans pay their winter heating bills. Residential heating oil prices are expected to be more than 20 percent higher than the average of the last five years, according to the White House.
Natural gas prices have also spiked to two-year highs, and may retain some of the increase even once the cold snap thaws, according to Bill O’Grady, a futures analyst at A.G. Edwards in St Louis.
“We will see prices come down once the weather breaks, he said. “But they probably won’t come off as much as they did in the past.”
Consumers and business that heat with electricity can also expect to pay more. Electric utilities were struggling to meet summer-like peak loads, which sent prices soaring in some markets. Prices spiked over $100 per megawatt in New England this week, before falling by week’s end. Big power generators like Hydro-Quebec in Canada and PPL in Pennsylvania saw record power usage.
Retailers were having mixed results. Sales of cold weather items — from mittens and snow shovels to car batteries — were brisk. But overall, traffic at the mall generally falls off when the weather is painfully cold, say analysts. While shoppers may simply postpone purchases until the weather clears, some businesses — like restaurants and movie theaters — have less opportunity to make up lost business, said Bram.
“When people are spending more resources on their heating bills, it comes out of discretionary expenses,” said Bram. “You don’t stop paying your rent, you stop eating out more.”
Farmers and ranchers were also scrambling to blunt the financial impact of the freeze. Beef prices have been pushed higher, in part, because cattle are slower to reach market weight, according to O’Grady.
“When it gets cold, the food (the cattle) eat — instead of eating it to get fat, they’re eating it to stay warm,” he said. “So they don’t gain weight as fast.”
This year’s winter wheat harvest may also be hurt by the cold, according to Jim Roemer, a weather consultant in Stowe, Vt. In much of the grain belt, where drought has left fields unprotected by snow cover, the hard freeze can damage crops, he said.
Florida citrus farmers were hoping the worst of the freeze had passed Friday, after apparently weathering the cold snap unscathed. Gov. Jeb Bush lifted weight restrictions on trucks as growers hurried to harvest as much of the fruit as possible before it was damaged by cold. But orange juice futures prices climbed on the New York Cotton Exchange Friday as traders bet that the frigid weather forecast for central Florida this weekend could still harm the state $9 billion orange crop. And strawberry growers won’t know how much damage was sustained until those crops thaw out early next week.
TEPID TOURISM
Some tourist hot spots turned tepid. Temperatures in West Palm Beach, Fla. fell to 35 degrees, a record, and a combination of cold and wind made it feel like it was in the teens across central Florida.
“We couldn’t believe how cold it was,” said tourist Martin King, who arrived this week in Orlando, Fla., from Bristol, England. “We brought shorts, T-shirt, and I had to go out and buy another coat.”
New England ski resorts, which got off to a good start with a relatively early snow this year, were quiet as all but the hardiest skiers stayed home.
“The ski lifts have been shut down in parts of New England,” said Roemer. “With wind chill factors of 20 and 30 below, nobody’s going to go skiing.”
State and local governments face higher overtime payments for workers, as road crews from Maine to Ohio worked overtime plowing snowfalls and spreading salt in icy roads. In Cincinnati, the city’s water works put its maintenance crews on 12-hour shifts to repair dozens of water main breaks caused by the cold.
Governments budgets, already squeezed by historic shortfalls, also face rising costs following a surge in demand for other emergency services. Homeless shelters were crowded by people with no other place to escape the deadly cold.
“It’s supposed to be very nasty,” said Rick Johnson, volunteer coordinator for the Western Carolina Rescue Mission in Asheville, N.C. “Our bedding will always be full when it’s cold like this.”
And the cold snap has taken another toll that’s almost impossible to calculate, according to Lynda Clemmons, a weather consultant at XL Weather & Energy in Stamford, Ct.
“You’ve also got the cost that takes place in terms of human health and actual illness and death that take place from extreme temperatures, she said. “There’s significant amount of damage that can be done through one cold spell.”
The Associated Press and Reuters contributed to this report.