July 24, 2021

World wide events like Suez Canal blockage cause ripple effect on Rapid City economy

RAPID CITY, S.D. (KOTA) – From toilet paper to gasoline, commodities are affected by events across the world, like the COVID-19 pandemic, ice storms in Texas, and the recent Suez Canal blockage.

But how do things on a national or worldwide level impact western South Dakota?

The COVID-19 pandemic saw toilet paper and cleaning wipes shortages for months, the February ice storm in Texas created natural gas deficiencies and the week-long blockage of the Suez Canal in Egypt created shipping delays that could be felt for weeks.

“There is a ripple effect, and it goes throughout the entire economy of the world, we’re all dependent on each other,” said Don Frankenfeld, a consulting economist.

A dependency magnified by the cargo ship Ever Given, that was released from the Suez Canal Monday.

“It’s sometimes referred to as the butterfly effect. A butterfly can flap its wings somewhere in Asia and create a series of disturbances that propel themselves all the way to Rapid City, South Dakota,” said Frankenfeld. ”The lack of Suez oil in Europe has an effect on the supply of oil even on the United States so the cost of gasoline in Rapid City is expected to increase by about five percent because of the Suez crisis.”

Frankenfeld said it takes weeks to remedy situations like the Suez Canal blockage and could continue to affect day-to-day things like your morning coffee.

“We have seen the prices of everything go up, you may feel it more in your pocketbook than you actually see a shortage,” said Greg Johnson, co-owner of Dark Canyon Coffee. ”Right now, I know that coffee prices have gone up about 15 or 20 percent just in the last five or six months. And that trend looks like it’s going to continue for a little while longer.”

The coffee shortage shouldn’t hit Rapid City too hard but a mixture of shipping delays in Egypt and poor growing conditions could resemble the pandemic toilet paper crisis or ice storm shipping delays.

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