Hurricane Sandy proves that an Internet economy is far from reality

By now, a decade into the 21st century, the virtual economy was supposed to be in full force.

The preferred method of trading stocks, buying Christmas gifts and planning trips is going online, sealed with the simple click of a mouse, and telecommuting has become more common.

Then Hurricane Sandy arrived, shutting down trains, subways and thousands of flights. Millions of commuters were stranded. Port closures and power outages disrupted operations at oil refineries and nuclear reactors.

All that is testing whether even in the New York region, arguably the country’s most important and sophisticated center of commerce and finance, electronic connections alone are enough to keep the economy moving.

As far as the country has traveled toward online commerce, the economy still depends very much on physical highways, not just Internet highways, as well as century-old networks for physically moving people and goods.

Jim Dinegar, president of the Greater Washington Board of Trade, said the shutdowns of the subway systems in Washington and New York City illustrate just how heavily both metropolitan areas rely on public transportation.

“There’s an enormous amount of lost productivity,” Dinegar said. “People are going to have to spend unproductive hours rescheduling and replanning” work that had to be canceled.

The limits of the virtual economy were on full display in Lower Manhattan, where stock exchanges considered keeping markets open through the storm via electronic trading. But regulators and some investors argued that humans were still needed for markets to work properly, noting the multitude of recent electronic glitches that have marred the trading of high-profile stocks such as Facebook.

The markets were kept closed Monday and Tuesday, the first time the weather had led to a shutdown of more than a day since 1888.

Some work tasks can be done long-distance, but many jobs and events can be carried out only in person.

One example is the annual fine-art print fair at the New York Armory, scheduled for this weekend. Dealers consider it the “Super Bowl” event of the year, attracting more than 6,000 people, said Michelle Senecal, executive director of the International Fine Print Dealers Association. The association postponed the opening by one day to allow more time for dealers — and their art — to arrive. One dealer who flew in before the storm and who was staying on Roosevelt Island joked that he might still need a rowboat to get to Manhattan.

Food distribution also relies on functioning roads. In Washington, Safeway customers might have trouble finding certain brands of yogurt and fruit juice because the storm shut down some manufacturers and distributors in New Jersey, New York and Pennsylvania, said Safeway spokesman Greg Ten Eyck.

“We’ll be affected by that for a few days,” he said.

Early estimates of the damage caused by Sandy range as high as $88 billion. If past major storms are a guide, look for industrial production to take a dip in October as factories from the Carolinas to New England suspend activity and for housing starts to slow as builders postpone new construction.

Retail sales may take a hit but are likely to benefit in November and December, when people buy the supplies they need to rebuild. There could be job losses, too, if some employers affected — Atlantic City casinos, for example — are unable to get back to full speed quickly.

But the true cost of the shutdown will not be known for weeks or even months. And its final price tag may be measured not only in the destruction of property but also by the profound disruption to the East Coast’s transportation systems, especially in New York City, which could take weeks to restore.

When the first 21-mile section of the New York City subway system was completed, one commentator proclaimed that it “opens a new era in rapid transit for crowded cities” and that its builders had “boldly attacked the task of making a wholesale transfer of passenger traffic to an underground level.”

Nearly a century later, that underground level is under water and the more than 5 million passengers who rely on New York’s subways every weekday will remain stranded above ground long after the weather clears Wednesday. New York Mayor Michael R. Bloomberg (I) said Tuesday that the salt water that flooded the system would make it difficult to clean up and impossible to predict a reopening.

The New Jersey Turnpike, a major commuting and trucking route, was closed north of Exit 14 near Newark because the storm pushed about two dozen rail cars onto the highway.

Eight airports shut down, including Dulles and Reagan National. From Sunday through Wednesday, United Air Lines canceled about 4,700 flights and American Airlines and American Eagle canceled 1,687 flights. An American spokesman said the company would not be operating again at most of those airports until “at least midday Wednesday.”

An oil refinery in south Philadelphia closed during the storm and on Tuesday was operating at just half of its capacity because the Coast Guard had suspended oil tanker deliveries in the region on Saturday. Yet the refinery was still pouring gasoline into its inventories because pipeline shipments have been curtailed by power outages that crippled pumps, said Philip L. Rinaldi, the refinery manager. A power outage also closed the Phillips 66 refinery and storage terminals in Linden, N.J.

Train service was canceled Monday and Tuesday along Amtrak’s Northeast Corridor, which carries 750,000 passengers daily between Washington and Boston. Amtrak officials said Tuesday evening that trains would run Wednesday on a modified schedule south of Newark and north of Boston. Acela Express service would remain suspended Wednesday along the entire Northeast Corridor. Amtrak officials said they could not predict when train service would return to New York’s Penn Station.

A growing number question the wisdom of concentrating so much financial might and capital in Lower Manhattan, a part of an island that is vulnerable to flooding in big storms.

“New York City remains the great sleeping giant of hurricane disaster scenarios,” Mike Tidwell, director of the Chesapeake Climate Action Network, wrote in a book published six years ago. “So many mutually reinforcing factors point to catastrophe in America’s largest city that, in many ways, it’s even more frightening than New Orleans. ‘The Bobbing Apple’ might be the name we use once the perfect storm arrives here.”

Lori Aratani, Luz Lazo and Neil Irwin contributed to this report.

Steven Mufson covers energy and other financial news.
Katherine Shaver joined The Washington Post in 1997. She has covered crime, courts, education and local government but most prefers writing about how people get — or don’t get — around the Washington region.
SECTION: {section=business, subsection=economy}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: {allow_comments=true, allow_photos=false, allow_videos=false, comments_period=14, comments_source=washpost.com, default_sort=, default_tab=, display_comments=true, is_ugc_gallery=false, max_items_to_display=15, max_items_to_display_top=3, moderation_required=false, stream_id=}!!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Comments
SECTION: {section=business, subsection=economy}!!!
INITIAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!!

UGC FROM ARTICLE: {allow_comments=true, allow_photos=false, allow_videos=false, comments_period=14, comments_source=washpost.com, default_sort=, default_tab=, display_comments=true, is_ugc_gallery=false, max_items_to_display=15, max_items_to_display_top=3, moderation_required=false, stream_id=}!!!

FINAL commentConfig: {includereply=true, canvas_permalink_id=washpost.com/8bvh5zpd9k, allow_comments=true, commentmaxlength=2000, includeshare=true, display_comments=true, canvas_permalink_app_instance=bg52e9xhqr, display_more=true, moderationrequired=false, includefeaturenotification=true, canvas_allcomments_id=washpost.com/km4ey0dajm, comments_period=14, defaultsort=reverseChronological, includevoteofftopic=false, allow_videos=false, includesorts=true, markerdisplay=post_commenter:Post Commenter|staff:Post Writer|top_commenter:Post Forum|top_local:Washingtologist|top_sports:SuperFan|fact_checker:Fact Checker|post_recommended:Post Recommended|world_watcher:World Watcher|cultuer_connoisseur:Culture Connoisseur|weather_watcher:Capital Weather Watcher|post_contributor:Post Contributor, childrenitemsperpage=3, includeheader=true, includeverifiedcommenters=true, defaulttab=all, includerecommend=true, includereport=true, maxitemstop=3, source=washpost.com, allow_photos=false, maxitems=15, display_ugc_photos=false, includepause=true, canvas_allcomments_app_instance=6634zxcgfd, includepermalink=false}!!
Show Comments
Most Read Business