Economic effects of Hurricane Katrina
The economic effects of Hurricane Katrina, which hit Louisiana, Florida, Texas and Mississippi in late August 2005, were far-reaching.
In 2006, the
There was also some concern when, on September 8, 2005, President Bush temporarily suspended the
Oil production
The storm interrupted oil production, importation, and refining in the Gulf eden, thus having a major effect on fuel prices. Before the storm, one-tenth of all the
Power outages in the wake of Katrina have also caused distribution problems for oil and natural gas. Pipelines which move petroleum products from places like Houston to areas of the east coast have had their flows interrupted because power outages shut down the pumps that kept materials flowing. Dick Cheney personally called the manager of the Southern Pines Electric Power Association on the night of August 30 and again the next morning and ordered him to divert power crews to substations in nearby Collins that were essential to the operation of the Colonial Pipeline, which carries gasoline and diesel fuel from Texas to the Northeast.[5]
At least twenty offshore
At 7:03 a.m. CDT on August 29, Ted Falgout, Port Director of Port Fourchon, Louisiana, a key oil and gas hub 60 mi (100 km) south of New Orleans on the Gulf of Mexico, reported that the port had taken a direct hit from the hurricane. The port services approximately 16% of the nation's supply of crude oil and natural gas.[6] According to Falgout, Hurricane Katrina, "will impact oil and gas infrastructure, not just short term but long term as well. The impact of the storm — the Gulf is shut down; all of the area of the storm is shut down; a half billion dollars a day of oil and gas is unavailable."
The Louisiana Offshore Oil Port, which imports 11% of all U.S. oil consumption, closed on August 27, and Shell reported a reduction in production of 420,000 barrels per day (67,000 m3/d).[7] The port was undamaged by the storm and resumed operation within hours of getting power back.
Due to fears that the production of oil in the United States will be cut by up to one-third of normal capacity, the price of oil fluctuated greatly.
Long lines developed at some gas stations throughout the U.S. as customers rushed to buy gasoline, anticipating price increases in the wake of the storm. Emphasizing the seriousness of the situation and in light of similar incidents in his own state, Governor Mike Easley of North Carolina has issued a statement asking all North Carolinians to conserve gas, limit fuel consumption and non-essential road trips, and for state employees to car pool.[9] On the day of the Governor's announcement, many gas stations around the state ran out of gas and lines were formed at others.
By 12:00 p.m. CDT on August 31, eight Gulf of Mexico refineries remained shut down and one was operating at reduced capacity. Evaluation of five of the eight refineries was delayed due to limited access. Aside from the problems involved in restarting the refineries (which is a lengthy process) there were additional major issues with worker housing, since a large proportion of homes were destroyed by the hurricane.
The Environmental Protection Agency moved to reduce prices by temporarily lifting fuel standards in America until September 15. Some crude oil was also released from the Strategic Petroleum Reserve, as well, to combat prices as major economic consequences were predicted if prices remained high for a long period of time — leading consumer spending to drop and causing many foreign economies, especially in Asia, to suffer. President Bush also temporarily waived the Jones Act, allowing foreign oil companies to ship oil between ports of the United States.
By September 7, Gulf oil production had returned to 42% of normal. Of 10 refineries that were shut down by Katrina, four were expected to be back at full capacity within a week, however another four could be out of commission for months.
Gambling and entertainment
Katrina forced many
In
Six Flags New Orleans was shut down to prepare for the storm and begin evacualtion procedures.
Harrah's New Orleans closed shortly before the storm and sustained storm damage. The building was also used by first responders as a base of operations in the days following the storm. The casino reopened on February 17, 2006, just in time for Mardi Gras,[10] and the Beau Rivage Resort and Casino in Biloxi, Mississippi, reopened on August 29, 2006, on the one year anniversary of Hurricane Katrina's landfall.[11] The Grand Casino Biloxi is undergoing extensive renovation, and is expected to reopen during the summer of 2006.[12] The Grand Casino Gulfport was destroyed as portions of the structure collapsed across Highway 90 and was demolished.[13]
Mississippi will lose approximately $500,000 in tax revenue for each day that the Biloxi-area riverboat casinos are closed, and about $140,000 per day for the South River region casinos. As a comparison, in 2004, Mississippi earned $2.7 billion in casino revenues, third behind Nevada and New Jersey ($10.3 billion and $4.8 billion, respectively).
Katrina was directly related to the controversial
Agriculture and forestry
According to the United States Department of Agriculture (USDA), the national impact of Hurricane Katrina on Gulf Coast crops was minimal, with most of the damage borne by minor producers of major crops (corn, soybeans, and cotton).[14] The main impact of the storm on agriculture is likely to involve ocean shipping and exports. In 2004, 22% of U.S. wheat exports, 71% of corn exports, and 65% of soybean exports passed through Gulf ports. Shipping did not occur until later in the fall, when ports would again be operational.[15]
In addition to the 50 Mississippi counties covered by the Presidential primary natural disaster designation, the USDA declared an additional 31 counties as primary agricultural disaster areas. This made farmers and other agricultural producers eligible for low interest emergency loans to cover losses. The remaining four Mississippi counties were classified as, "contiguous" and were also eligible for assistance.[16]
Forestry constitutes a major industry in southern Mississippi, accounting for 10% of all jobs in the state.[17] According to the Mississippi Forestry Commission, Hurricane Katrina caused significant damage to 1.3 million acres (5,300 km2) of forestland in the state. The greatest damage occurred from the coastal counties northward to Laurel, with heavy damage to pine forests in Hancock, Harrison, and Pearl River countries.
An estimated 14.6 million cords (52,900,000 m³) of paperwood and 3.2 billion board feet (7,600,000 m³) of sawtimber were destroyed. The estimated economic impact of this loss was $1.3 billion. Additionally, there was an estimated $1.1 billion in damage to urban trees in 181 Mississippi communities.[18]
Utilities
The local electric utility
Insurance Response
The Insurance Information Institute reports that Hurricane Katrina was the costliest disaster in the history of insurance. It said that the insurance industry paid $41.1 billion ($45.1 billion in 2009 dollars) and more than 1.7 million claims – across six states. Some 15,000 claims adjusters from across the country were called in to handle the record number of claims for damage to homes, businesses and vehicles. Louisiana accounted for 63 percent of insured losses and Mississippi accounted for one-third. In addition, the federal government-operated National Flood Insurance Program (NFIP) paid out $16.1 billion in claims from flooding. Damage from flooding, including storm surge from a hurricane, is covered by the NFIP, but is not covered under standard homeowners insurance policies. The institute also said another $2 billion to $3 billion of insured damages occurred at off-shore energy facilities.[19]
See also
- Damage to infrastructure by Hurricane Katrina
- Economic impact analysis
- Hurricane Katrina effects by region
- Oil price increases since 2003
References
- ^ St. Onge, Jeff; Epstein, Victor. "Ex-chief says FEMA readiness even worse." Boston.com. May 1, 2006.
- ^ Burton, Mark L.; Michael J. Hicks. "Hurricane Katrina: Preliminary Estimates of Commercial and Public Sector Damages Archived 2005-10-17 at the Wayback Machine." Marshall University: Center for Business and Economic Research. September, 2005.
- ^ Bush, George W. "Proclamation by the President: To Suspend Subchapter IV of Chapter 31 of Title 40, United States Code, Within a Limited Geographic Area in Response to the National Emergency Caused by Hurricane Katrina." White House. September 8, 2005.
- U.S. Census Bureau.
- ^ Maute, Nikki D. "Power crews diverted: Restoring pipeline came first[permanent dead link]." Hattiesburg American. September 11, 2005.
- ^ Press Release. "FHWA Issues Record of Decision on LA 1 Improvements Archived 2005-09-14 at the Wayback Machine." Louisiana Department of Transportation and Development. January 31, 2003.
- ^ Laverty, Gene. "Oil, Gas May Soar as Storm Shuts U.S. Gulf Production Archived 2005-10-28 at the Wayback Machine." Bloomberg. August 28, 2005.
- ^ Staff Writer. "UK petrol prices continue to rise[permanent dead link]." BBC News. September 5, 2005.
- ^ Staff Writer. "Gov. Mike Easley Statement On N.C. Gasoline Supply Archived 2005-10-31 at the Wayback Machine." WRAL-TV.
- ^ Press Release. "Harrah's New Orleans Re-Opens Friday, February 17, as the fun and excitement of Mardi Gras Begin." Harrah's Entertainment. February 6, 2006.
- The Sun Herald. August 22, 2006. Retrieved on August 29, 2006.
- ^ Staff Writer. "Harrah's (Grand Casino) First Phase of Reopening Archived 2006-04-18 at the Wayback Machine." Gulf Coast Information Guide. March 21, 2006.
- ^ Staff Writer. "Gulfport's Grand Casino Goes Bust – Literally Archived 2005-10-28 at the Wayback Machine." WLOX-TV. September 21, 2005.
- ^ Staff Writer. "Impact on US crops from hurricane minimal, says USDA." ABC. September 13, 2005.
- ^ Samuelson, Robert J. "Hitting the Economy." MSNBC. September 12, 2005.
- ^ Westcott, Stevin. "USDA Designates Counties in Mississippi as Agricultural Disaster Areas." United States Department of Agriculture. September 9, 2005.
- ^ Staff Writer. "Mississippi Forestry Facts Archived 2005-10-25 at the Wayback Machine." Mississippi Forestry Association. Accessed 2005.
- ^ Grizzard, Kent. "Forestry Commission Reports $2.4 billion of Tree Damage Archived 2005-11-12 at the Wayback Machine." Mississippi Forestry Commission. September 7, 2005.
- ^ Insurance Information Institute Issues Update, Catastrophes: Insurance Issues. "[1]."