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AMERICAN MORNING
Minding Your Business: Blackout Fallout
Aired August 18, 2003 - 07:46 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: Now that the blackout is over, it's time to tally the score -- winners and losers. Andy Serwer is here with those "Minding Your Business." Good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you, Jack.
CAFFERTY: Welcome back from vacation.
SERWER: Thank you. Nice to see you.
CAFFERTY: How come you get so much time off and the rest of us don't?
SERWER: You've got to figure it out, Jack.
CAFFERTY: Oh.
SERWER: You should be figuring that out. Anyway, listen, I want to talk...
CAFFERTY: I want to talk to your agent.
SERWER: All right, you should. Six billion dollars is the number that's being thrown around this morning in terms of the cost of the blackout, which is kind of a drop in the bucket of a $10 trillion economy.
CAFFERTY: Sure.
SERWER: Economists say look at it like a winter storm, you know, which is the good news because, you know, it throws things -- but the bad news, of course, is the economy is so fragile that...
CAFFERTY: Right.
SERWER: ... anything can set this thing back.
And let's take a look at some of the parts of the economy that suffered the worse. So, let's take a look at the losers. First of all, airlines, about 1,000 flights delayed. New York, Detroit, Toronto -- that was all messed up.
Automakers, 50 auto plants in the U.S. were blacked out. They're just getting back to speed.
And Wal-Mart, they didn't have backup generators at Wal-Mart!
CAFFERTY: Oh!
SERWER: Two hundred stores went dark. Sam Walton is spinning around in his grave over that one, I am sure.
CAFFERTY: I'm sure.
SERWER: Let's talk about some of the winners, though, which is kind of really more surprising a little bit here. Insurance companies, why? Because there is no coverage for blackouts in many instances. There is a 24 to 48 hour deductible, whereby you have to pick up the tab if you're a company. Small businesses are not covered. Also not much looting at all, of course. So, that helps them out.
Home depot did have backup power, and this is really cool, Jack. They sold a boatload, there were many truckloads of generators, 5,000 generators at about $400 a pop, right?
CAFFERTY: Wow! Yes.
SERWER: So, it's about $2 million of extra revenue they got over the weekend.
CAFFERTY: Found money.
SERWER: Yes, found money. And the taxpayers, just the last point here is interesting. August 15 was the deadline if you filed for an extension in April. The IRS says we're going to give you another week.
CAFFERTY: Ain't they nice?
SERWER: Oh, they sure are.
CAFFERTY: Gas prices headed even higher.
SERWER: Yes, because, you know, the refineries were shut down, right?
CAFFERTY: Yes, right.
SERWER: I mean, you know, so a bunch of...
(CROSSTALK)
CAFFERTY: And the rest of us get the power back on in 12 hours and life goes on.
SERWER: Yes.
CAFFERTY: But not the oil industry.
SERWER: It takes two or three days, they say.
CAFFERTY: Which means gas prices can go up.
SERWER: Which gives them a chance, an opportunity...
CAFFERTY: Yes.
SERWER: ... an excuse to raise prices.
CAFFERTY: There you go.
SERWER: We're looking 10 cents more a gallon. Of course, the situation in Phoenix, we're up towards $2 there, so that's because of a broken pipeline also.
CAFFERTY: I was in Washington over the weekend. They have full serve and they have serve yourself. The difference in pricing is 45 or 50 cents a gallon if you want full service in Washington, D.C.
SERWER: Wow!
CAFFERTY: And that means some person that you don't want touching your car comes out with an oily rag and and says, "Do you want me to check anything?" And you say, "Please, just go away. I can do this myself."
SERWER: Was that a congressman? No, all right.
CAFFERTY: Andy Serwer "Minding Your Business."
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