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Morning Commentary

Investing in Real Building Blocks & Dams

By Charles Payne, CEO & Principal Analyst
2/13/2017 9:27 AM
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Paging the Little Dutch Boy, Paging the Little Dutch Boy

Nothing to see here folks.  The news out of California that a dam has sprung a leak is more than worrisome, it’s a frightening reminder of how much work has to be done to fix our infrastructure.  Apparently, the hole is in the main spillway of the Oroville Dam, which officials are saying is sound.  Yet, all 23,000 California National Guard (soldiers and airmen) have been put on alert. 

Moreover, close to 200,000 evacuations have been ordered:

This news calls to mind the story of the little Dutch Boy, which was a cautionary tale about sacrifice, fixing problems fast, and cooperation.   The fact of the matter is when it comes to crumbling infrastructure, none of the above apply.  Our dams are in terrible shape with 14,000 consider high hazard, which means if they fail, there would be loss of life.

US Dams

Grade D

84,000

Dams in the United States

14,000

High Hazard

4,000

Deficient

2,000

Deficient High Hazard

$21.0  Billion

Cost to Repair

 

It should be noted that the federal government only owns 3,225 dams, or 4%, and the U.S. Army Corps of Engineers owns only 694 dams making this a very intensive states issue.

California is in a particularly precarious position.

Some may wonder why California is trying to build a $68 billion high-speed rail project that nobody wants, when its focus should be on saving infrastructure already in place and building routes that add to the economy rather than become white elephants.

On the national level, this event should add to a sense of urgency for that $1.0 trillion infrastructure program and add to the bid beneath construction/infrastructure stocks.

I can only hope money will be spent so much wiser the next time around as its estimated the cost to patch up the Oroville Dam could top $200,000,000 – I bet it will be more.

Charles V. Payne

 

 


Comments
If it's a government project you'd better quadruple the first estimate.

Phillip Gossage on 2/13/2017 9:48:41 AM
Reason why California is trying to build a $68 billion high-speed rail project: Jerry "Moonbeam" Brown's ego.

James Warlin on 2/13/2017 12:33:32 PM
I could see it coming. Got out of Calif. in '74 when he was chasing celebs(Linda Ronstadt).

E.V. Wagoner on 2/13/2017 2:43:21 PM
 

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