by Brian Hicks [-from 'Cutting Edge']
April 10, 2002

I don't know if you've been keeping an eye on the meteorological reports coming out of the East Coast, but Governors from Maine to Florida could be facing a revolt reminiscent of Shay's Rebellion.

Sounds overly dramatic, but it isn't. In fact, there was a revolt of sorts just last summer in the West. A group of farmers rebelled in Klamath Falls, Oregon for exactly the same reason - a severe water shortage caused by drought.

Tired of watching their crops die of thirst, farmers broke into the Klamath Falls Canal, releasing about a million gallons of water into the valley to water their farms. It didn't help much. The Feds were called in to restore order and to protect the water. And many farms turned into dust bowls. The same pattern is about to repeat itself here on the East Coast...and most residents are not prepared. It's not even 2 weeks into the Spring season, and Governor Glendenning of Maryland has already implemented water restrictions and declared a state of emergency in 7 Maryland counties.

Some think he's jumping the gun. But I see a crisis developing on par with the natural gas squeeze of Winter 2001 and the California electricity crisis of last summer. To Glendenning, who isn't exactly popular to begin with, the drought may be welcome news.

But for New Yorkers, the situation is nothing if not scary. Water reservoirs in New York City are so low that dangerous levels of diarrhea-causing bacterium have been detected. And doctors are now advising city residents with weak immune systems to boil the water before drinking it.

It's bad. Residents of the West Coast have already felt the pain. States like California, New Mexico, Nevada and Colorado have endured a drought for years, which is why some major rivers in the West are completely dry in parts. The Colorado River, one of the primary water sources for California and Nevada, has been sucked so dry it doesn't even reach the ocean anymore. I'm far from being a geologist, but even I know that when a river doesn't make it to the sea - it's a problem.

How bad it will get is anybody's guess. The La Nina weather pattern of 1998 changed the course of the jet stream in the U.S. Instead of getting a steady flow of precipitation coming from the Pacific Ocean, some states in the West are now receiving only about 50% of their normal rainfall. Los Angles, for instance, only received a third of its annual rainfall last year. If the La Nina effect continues for another year or two, the West and Midwest could see year-long forest fires. With no rain and an already severe shortage of water, firefighters would be helpless.

The water shortage has gotten so bad that many oil and precious metals mining companies have switched gears and started drilling for water. During a March 28 meeting, Christine Todd-Whitman, director of the EPA, got everybody's attention (especially investors) when she announced that water was "the biggest environmental issue that faces the U.S. for the 21st century..."

According to the U.S. Geological Survey, 57 rivers on the East Coast - 8 in New Jersey alone - are at their lowest levels in history. That's pretty dramatic. But not as dramatic as this: the government plans to spend anywhere from $480 billion to $1 trillion over the next 10 years to "fix" the water problem.