Economic Effect of Hurricane Katrina

Economic Effects of Hurricane Katrina

Ellen Wertz

On August 29, 2005, a deadly hurricane named Katrina struck the Gulf coast of the United States. Katrina brought sustained winds of 100 to 140 miles per hour and stretching almost 400 miles across making it a category 3 rating on the Saffir-Simpson Hurricane Scale (a scale that classifies hurricanes by the intensities of their wind). A few days in advance, the civilians living along the gulf had prepared and evacuated areas that were said to be hit the hardest by meteorologists keeping an eye on the tropical disaster. Although there was an  They predicted that most of the Gulf Coast would be unattainable for weeks or more...and they were right.

Hurricane Katrina affected the United States economy tremendously. It posed for many negative externalities that no one could have prevented. According to About.com’s article, How Much Did Hurricane Katrina Damage the U.S. Economy, “The actual cost of Hurricane Katrina's damage was between $96-$125 billion, with $40-$66 billion in insured losses”. Half of the costs came from flooding in New Orleans. It was also estimated that there were 300,000 homes destroyed or uninhabitable and there was at least 118 million cubic yards of debris left behind across the gulf. This caused the clean up efforts to be mind-boggling and time consuming.

A few of the devastations that Katrina caused was oil production. The tropic storm affected 19% of the United States oil production by destroying 113 offshore oil and gas platforms, damaging 457 oil and gas pipelines, and spilling thousands of gallons of oil. According to about.com’s article, How Much Did Hurricane Katrina Damage the U.S. Economy, “Oil prices to increase by $3 a barrel, and gas prices to nearly reach $5 a gallon. To stop the escalation in gas prices prices, the U.S. government released oil from its stockpile in the strategic petroleum reserves (an emergency fuel storage of oil maintained by the United States Department of Energy). Katrina also struck Louisiana’s sugar industry with an estimated $500 million annual crop value and in Mississippi 12 casinos that took in $1.3 billion annually took a hit. But one of the biggest hits from the storm was New Orleans. The storm caused $260 million in damage to the port as well as million dollars due to destroyed homes. Now, 14 years later, the gulf coast has been rebuilt, but there is still a lot more to rebuild and clean up.

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