Due to the drought, the Mississippi River’s water levels are dropping, which is causing barges carrying cargo to become stuck in the mud.
Americans are beginning to feel the effects of inflation in their wallets, and a number of recent events, such as an increase in gas prices following OPEC’s decision to significantly reduce oil production, are making the economy worse. Recent interest rate increases by the Federal Reserve may worsen inflation on “the food side of things,” according to a financial expert who spoke to Newsweek.
The 2,350-mile-long Mississippi River connects the Gulf of Mexico to the middle of the continental United States. The Mississippi River is “significant to national trade,” according to the National Park System, and serves as a conduit for 500 million tons of imported goods. economy. Grain, petroleum products, iron and steel, grain, rubber, paper, wood, coffee, coal, chemicals, and edible oils are the commodities that are most frequently transported on the Mississippi.
The U.S. For the purpose of moving the goods up and down the Mississippi River, the Army Corps of Engineers maintains a nine-foot shipping channel from Louisiana to Minnesota. The Weather Channel reported that the waterway was so narrow in some areas of the drought-stricken channel that barges were stuck and backed up for miles.
Effects on Inflation
According to Jeffrey Bergstrand, a finance professor at the University of Notre Dame, the drought will probably cause shipping costs for agricultural goods to increase.
Supply chain constraints, a lack of staff, and port lockdowns slowed and, at times, stopped shipping, according to Bergstrand, who also compared the shipping slowdown to the COVID-19 pandemic. Low water levels could have a wider economic impact, according to Bergstrand, in addition to making shipping more difficult and expensive.
He claimed that those factors had similar effects on the overall macroeconomy to the effects of oil prices. “That cost shock usually gets passed on in higher prices and tends to make our inflation problem worse.”
According to Bergstrand, the agricultural sector will be most affected. The full impact of the price increase may not be felt for several months.
U.S. According to Army Corps of Engineers Public Affairs Officer Lisa Parker, the current drought is expected to last for the foreseeable future. The region last experienced such a severe drought in 2012.
“Drought conditions are present along the Mississippi River basin. She said in an email statement to Newsweek that there are effects on commerce, shoaling, saltwater intrusion, and municipal water intakes, to name a few. The Corps and the US Coast Guard are collaborating to determine which areas require dredging. In the entire river basin, the Corps is working to maintain a 9-foot navigable channel.
In the end, she said, “We need rain.” The Ohio and Missouri rivers, which feed into the Mississippi River, are also experiencing low water levels. To address the problems, we are collaborating with our regional, national, and international partners.
As reported by CBS News, the U.S. Despite the fact that loads are limited to compensate for the low water levels, the Coast Guard reported eight instances of barges grounding, or becoming stuck along the bottom of the river. Between Missouri and Louisiana, the water level is low, and the Weather Channel attributed the drought to a lack of rainfall.
Update: 1:46 p.m. on October 22. ET: A U.S. comment has been added to this article. Lisa Parker is a public affairs officer for the Army Corps of Engineers.