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.
http://youtu.be/ByUDv4eqlPU
"How Much Did Hurricane Katrina Damage the U.S. Economy?." About.com US Economy. N.p., n.d. Web. 27 Feb. 2014. <http://useconomy.about.com/od/grossdom
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I remember when Hurricane Katrina hit. It was devastating. All the destruction and people without homes, it was terrible. I knew the hurricane would cause a lot of spending, but I didn't realize how much spending it did cause. $125 million!!!! That's a lot. How long did it take for them to clean the mess up (or at least the majority of it)? It's a shame how the video didn't work though.
ReplyDeleteThis post was interesting to read about, because even years after this storm hit, it's still such a saddening story. I had heard about the extensive damage and flooding that the hurricane had brought. I had also seen a lot of media coverage concerning families in need of help and volunteer opportunities. However, you put it in a new perspective by viewing it from an economic angle. Your statistics really make the point hit home even more. Since I had never really heard too much about the costs associated with this hurricane, the numbers shocked me. No wonder gas has been so expensive. I would like to see what state New Orleans is in now, physically and economically.
ReplyDeleteI agree with how incredibly devastating that this was! I also agree that there was many negative externalities that came with it; many things were destroyed and needed rebuilding. You can only imagine how much grief people went though and lives that were destroyed. Also, thinking of the rebuilding process, family most definitely started to think about their elastic and inelastic goods. When your whole entire home gets destroyed, you will change the way you look at goods and end up really rationalizing what you do and don’t buy.
ReplyDeleteI don't think people fully understand how big of a deal these storms really are. Throughout my life I have never really been in a storm that had threatened my life in any way shape or form. So seeing disasters like these are obviously terrible and I feel bad for the people who go through the dangers of these storms and lose family members as well as their homes. I never looked this deep though and seeing how much a storm that we can't control can affect our economy is kind of scary because who knows what is coming in the future. Planning for emergencies is a bigger deal than we give credit for because we have no clue how to stop any of these disasters from happening we just have to hope that our economy can survive.
ReplyDeleteReading this article had really shocked me I remember on TV they had made a big deal about Hurricane Katrina but after reading I had no idea on how big of a deal it really was. 96-125 BILLION, that’s insane and still working on the gulf of after how many years is probably more cost worthily. With the thought of rebuilding that area I feel as though its not even worth it. thats just more money that will be spent and do we really new to try and rebuild a damaged area? I believe not because what if it happenes again its unlikey but still possiable
ReplyDeleteHurricane Katrina left vast economic downfall on the economy. Not only did it lower the GDP due to the major unemployment rise and the houses that were lost in the hurricane. The economic cost of Katrina were great and lead to a lot of debt for many. The thought of rebuilding the entire area that the Hurricane hit would have an economic benefit that would be surpassed by the economic cost in the long run. Therefore a solution to this problem would be to build little by little in the short run so that the total cost of the area does not reach a certain unattainable point that cannot be paid off. Also this is where insurance took a big hit and government spending was increased for protection and rebuilding. Overall Hurricanes are just another answer for an economic downfall and major cost to the total economy.
ReplyDeleteIt was really interesting to read your article on Hurricane Katrina and the effects it has on the economy. I never realized that one hurricane could effect what is going on in the entire US. I always thought that it mostly just effected the employment and economy in that area. It is interesting that even though our entire country suffered because of the impacts of Hurricane Katrina that even when it happened many did not notice the impacts. I personally took a mission trip down to New Orleans to help rebuild houses for a week. It was very interesting to see the devastation these people were left in. Though it is many years later they are still suffering greatly from the impacts of this hurricane. Nice job Ellen!
ReplyDeleteIt honestly blows my mind the damage that Hurricane Katrina did, but is still continuing to do. It is really upsetting to see this because there really is no control and nothing we can do to prevent natural disasters. No matter what, they can happen and we have to go into damage control when they do. I couldn't believe how much debt it put not only the state of Lousiana into, but our country as well. No one knows what is going on behind the scenes, so its crazy to think that all of this money was being pulled to cover our country. I also had no idea that it directly affected some businesses in Mississippi. This is definitely one of the biggest negative externalities I could ever think about, and we are still dealing with it, especially the state of LA, to this day.
ReplyDeleteI am not one hundred percent sure but I think that a hurricane cannot be a negative thing. But even though the destruction caused by this hurricane helped the City of New Orleans in the long run. For example they had large sums of government spend that helped rebuild the slums of Orleans. The saddest part of this even though, the fact the government has spend billions on new homes that will get destroyed next hurricane. Most of these houses are built in low lying areas. Great peace dealing with the spill over effect of Natural disaster.
ReplyDeleteUnfortunately even before hurricane Katrina hit, there were definitely concerns and worries about the damage that was going to hit them. This is one of those unfortunate natural disaster's that can be hard to prepare for, because although they knew that there was a hurricane coming they might not of known of the extensive amount of damage that it was capable of producing. I can believe that it ended up costing millions of dollars because it affected multiple states, which included homes, factories, businesses, land and more. It's sad to think that the people who were affected by hurricane Katrina are still recovering and rebuilding. This definitely made an huge impact on the states that were hit along with our country as a whole.
ReplyDeleteThe offshore damage is what really hurt our economy. 113 Oil platforms were destroyed. If you think about it, that's a huge percentage of our oil. Now I have more of an understanding on why there was such a dramatic increase in the price of oil shortly after. It's crazy that a storm can be this devastating to an entire country. You never would expect it.
ReplyDeleteI remember when hurricane Katrina hit, and hearing about all the families who lost their homes and loved ones. This post was interesting and sad to read, to remember all the horrible things that happened and after almost a decade there is still so much to be done, but all the newscast and volunteers that have helped make a difference to those people was a positive thing. It was impeccable to see the economic view of everything; it never occurred to me that there would be up to $125 billion worth in damage to streets and homes. I would love to travel down there to see what progress they have made since then and get a response from a personal perspective instead of from the media.
ReplyDeleteHurricane Katrina was one of the many tragic events that occurred in the United States. You said in your post that Katrina produced 100 to 140 mile per hour winds. I would have no idea what that would be like to be in the storm. If I had that chance I would have liked to see in person what that kind of Hurricane could produce. But it is great to see what the city of Louisiana did to rebuild.
ReplyDeleteThe devastation caused by Hurricane Katrina to the Gulf Coast was horrific to say the least; hundreds of thousands of homes were destroyed by the devastating winds or deemed inhabitable due to the flood waters. New Orleans took the biggest hit from the storm, the Louisiana super dome was a safe haven for many residents, but it too was damaged by the hurricane.
ReplyDeleteThis is written really well and your points on how such a massive disaster still years later has such a saddening effect is crazy. I went down to New Orleans shortly after the hurricane and helped rebuild homes and clean up and it's really sad that we see what's on the news about the homes destroyed and families lost but I think a lot of the time people don't realize how extensive the damage done is and how it can take years to rebuild an economy to stability after something like this. You did a really nice job at getting that point across in your article with your statistics - it puts more of a reality on why things like prices of gas have gone up. The drastic shift in the economy doesn't only effect New Orleans either and it takes more than them to rebuild the damage.
ReplyDeleteWhen a natural disaster hits, it affects so many people economically. Not only are the cities hurt in terms of damage but income from industries are affected. For example this storm most likely took a tool on the tourism industry after the storm because people would not have traveled to a city that is all torn up. Also as you mentioned industries such as oil industries and crop industries lose money and those in the country also face negative externalities as the price raises on some of these items as a result of there being a low supply.
ReplyDeleteThis is a great example of how a decrease in supply drives up prices and destroys GDP. Looking back, this was indeed a horrific accident for the people directly affected and all of the participants in our economy that felt the decline, but our bounce back was surprisingly effective. Private insurance companies as well as massive government contributions made the clean-up in the gulf as well as the restoration of New Orleans. All-in-all, the nation came together quite well and helped fix this problem which I think gave the citizens some assurance that the government has a pretty good plan for these sorts of disasters, and that we can count on our country to fight together in times of need.
ReplyDeleteThis is a great example of how a decrease in supply drives up prices and destroys GDP. Looking back, this was indeed a horrific accident for the people directly affected and all of the participants in our economy that felt the decline, but our bounce back was surprisingly effective. Private insurance companies as well as massive government contributions made the clean-up in the gulf as well as the restoration of New Orleans. All-in-all, the nation came together quite well and helped fix this problem which I think gave the citizens some assurance that the government has a pretty good plan for these sorts of disasters, and that we can count on our country to fight together in times of need.
ReplyDeleteHurricane Katrina created not only economic downfall in surrounding areas such as New Orleans but also the entire country. The effect it had on oil was extremely negative and caused decline in real GDP hurting the entire economy. Not only did it affect oil but it also affected crops in the surrounding areas and travel. Furthermore it greatly affected the lives of those around where the hurricane struck. It created huge sums of debt and destroyed many sources of business leading to unemployment. The negative externalities Hurricane Katrina created caused large consequences to the entire country. It harmed not only those directly affected but also those indirectly. It was a large source of economic downfall for the entire country and can be named one of the causes of the resulting economic recession in years to come.
ReplyDeleteWhat I knew from before your article was how much it affected homes and businesses but never how it affects the economy nationwide. Losing billions of income to a city is ground breaking because like you said, it raises prices for everything. Another thing I didn’t know before is how high gas prices had risen because of that. Though I understand that the prices were high, did America really need to open up the emergency gas just to lower the cost of gas prices? What I would of liked to read from your article is how New Orleans has been recovering from Hurricane Katrina, how the business are running now and how they dept. of the natural disaster is being paid off.
ReplyDelete