This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Winter Storms Cost the American Economy Billions of Dollars

By Hal M. Bundrick

NEW YORK (MainStreet) Mighty winter storms, often mothered by conflicting hot and cold air masses in the Midwest, lumber cross-country -- slogging the nation into icy disarray. Not only are these blizzards a dangerous threat and a commuter's nightmare, but the inconvenience is easily outweighed by the cost. While the human toll is incalculable, the financial impact is measurable and massive.

Downed power lines and the resulting loss of power due to weather costs the economy $25 to $70 billion annually, according to the Congressional Research Service. This broad guesstimate is due to the varying assumptions and data used, including lost output and wages, spoiled inventory, delayed production, inconvenience and damage to the electric infrastructure.

The rickety American power grid has been pummeled for more than a century. According to a White House report prepared by the President's Council of Economic Advisers and the U.S. Department of Energy, between 2003 and 2012 an estimated 679 widespread power outages affecting at least 50,000 customers each occurred due to severe weather.

Must Read: Legalized Marijuana Sales Rock the Rockies

Of course, the annual economic impact varies greatly depending on catastrophic events, such as Hurricane Ike in 2008, a year in which cost estimates range from $40 billion to $75 billion, and Superstorm Sandy in 2012, a year in which cost estimates range from $27 billion to $52 billion.

In 2012 alone, the United States suffered eleven separate billion-dollar weather disasters the second-highest of any year on record, behind only 2011, the year of Hurricane Katrina.

America's power grid is aging and frail, with construction that dates back to the late 1880s. The construction of new transmission lines has grown at a rate of only 2,300 new circuit miles for the five years leading up to 2012. Fully 70% of the U.S. grid's transmission lines and power transformers are now over 25 years old. The average American power plant is over 30 years old.

However, there is work underway to bolster the reliability of the U.S. power grid. The American Recovery and Reinvestment Act of 2009 allocated $4.5 billion to the U.S. Department of Energy for investments in modern smart grid technology, which utilizes remote control and automation to better monitor and operate the grid.

But it's not just power outages. Severe weather impacts the economy in other ways, as well. The U.S. Department of Transportation estimates that the cost of weather-related traffic accidents costs Americans $42 billion per year, accounting for nearly one-quarter (24%) of all vehicle crashes.

Winter road maintenance comprises nearly 20% of all state departments of transportation budgets. And trucking companies lose an estimated $2.2 to $3.5 annually due to weather delays.

So as you cling to that cup of hot chocolate and stoke the fire waiting for the lights and the heat to come back on, remember, this blizzard isn't just costing you sleep it's costing you money.

Written by Hal Bundrick for MainStreet

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.19 0.00%
FB $118.06 0.00%
GOOG $695.70 0.00%
TSLA $222.56 0.00%
YHOO $36.00 0.00%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs