Drought Problems Persists: Chris Mayer / June 26, 2007

The West experienced its sixth driest spring on record. Drought conditions also hit other parts of the country. Alabama, Tennessee, Georgia and Mississippi all had the driest springs in 113 years.

The drought persists into summer causing or contributing to all kinds of economic losses. We’ve had the worst fire in the Lake Tahoe Basin in a half a century. Mounting crop losses. Damaged timberland. Lack of hay causing the liquidation of cattle herds (a kind way to put it). Low water levels in freshwater lakes. Drought conditions look like they will spread into the Midwest — the heart of the ethanol boom — where farmers have planted record amounts of corn. All of that is at risk.

There are many spinoff effects of all this. Water is more precious than ever. A rising water price seems inevitable. Water conservation is more important than ever. That’s good for irrigation companies, for example. But is also means that this year’s grain crop could be light, driving grain stocks to new lows and prices to new highs. — Chris Mayer

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