Hurricanes Katrina and Rita destroyed 113 offshore oil and gas platforms, damaged 457 oil and gas pipelines, and spilled nearly as much oil as the the Exxon Valdez. Hurricane Katrina affected 19% of U.S. oil production, causing oil prices to rise $3 a barrel. However, oil prices barely budged in response to Hurricane Ike. That's because oil prices in general are in a decline this month, thanks to expectations of a slower global economy and the end of the U.S. summer driving season.
However, gas prices did rise to as much as $5 a gallon, since gasoline inventories were low in the area even before the Hurricane hit. The Department of Energy will deliver 300,000 barrels of oil from the Strategic Petroleum Reserve to the area. (Source: AP, "Ike skews gas; some stations ask $5 a gallon"; About.com Environment, Hurricane Gustav: How Hurricanes Threaten Offshore Drilling and the Environment
It is too soon to say how much of the $1 trillion of insured commercial and residential property that lay in Hurricane Ike's path was destroyed. About $70 billion lay near the shore, with $900 billion further inland. Although hurricanes usually lose power the further inland they go, Hurricane Ike had a very wide path.(Source: AP, "Nearly $1T of insured property in Ike's path", September 12, 2008)
If Hurricane Ike does wreak havoc inland, it could cost the economy more than the $125 billion in damages caused by Hurricane Katrina. In 2005, GDP growth went from 3.8% in Q3 to 1.3% in Q4. However, in 2005 the economy was still growing strongly, and by Q1 2006 GDP growth bounced back to a robust 4.8%. This year, with the economy struggling to escape a slump, a 1% decline in Q4 could send GDP growth into negative territory. Combined with the negative growth rate in Q4 2007, this would qualify as a technical recession. (Source: BEA,National Accounts; USA Today,"Katrina damage estimate hits $125B")
