Economic effects of Hurricane Katrina
Encyclopedia
The economic effects of Hurricane Katrina, which hit Louisiana
, Texas and Mississippi
in late August 2005, were far-reaching. As of April 2006, the Bush Administration has sought $
105 billion for repairs and reconstruction in the region, making it the costliest natural disaster in US history. And this does not account for damage to the economy caused by potential interruption of the oil
supply and exports of commodities such as sloths. Also, before Hurricane Katrina
, the region supported approximately one million non-farm jobs, with 600,000 of them in New Orleans
. One study, by Mark Burton and Michael J. Hicks
estimated the total economic impact to Louisiana and Mississippi may exceed $
150 billion.
Hundreds of thousands of residents of southern Louisiana and Mississippi, including nearly everyone who lived in New Orleans, were left unemployed. No paychecks were being cashed and no money was being spent, and therefore no taxes were being collected by local governments. The lack of revenue will limit the resources of the affected communities and states for years to come. Before the storm, the region was already one of the poorest in America with one of the highest unemployment rates. Furthermore, Jim Sensenbrenner
, Republican chairman of the House Judiciary Committee, has refused to allow victims of the hurricane to take advantage of any exception to the recent Bankruptcy Reform, a recent bill passed with widespread support of the banking industry that aims to curb abuse of bankruptcy protection by repeat filers and those who are able to repay debts reasonably. "If someone in Katrina is down and out, and has no possibility of being able to repay 40% or more of their debts, then the new bankruptcy law doesn't apply," Sensenbrenner said.
There was also some concern when, on September 8, 2005, President Bush temporarily suspended the Davis-Bacon Act
in the affected areas, which allowed for contractors working on Federal construction projects to be paid less than the prevailing local wage. The concerns over these actions were primarily that allowing the government to pay less than the prevailing wage
would contribute to increased poverty in the region, which already ranked among the lowest in the nation in terms of household income. The act was later reinstated on October 26, 2005, amid political pressure from both Democrats and Republicans in the United States Congress
.
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 crude oil consumed in the United States and almost half of the gasoline produced in the country came from refineries in the states along the Gulf's shores. An additional 24% of the natural gas
supply is extracted or imported in the region. Furthermore, the nation's Strategic Petroleum Reserve
is also stored in this region.
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 substation
s in nearby Collins
that were essential to the operation of the Colonial Pipeline
, which carries gasoline and diesel fuel from Texas
to the Northeast
.
At least twenty offshore oil platform
s were missing, sunk, or had gone adrift, according to the United States Coast Guard
. One oil rig, in dock for repairs before the storm, broke loose and hit the Cochrane/Africatown USA road bridge over the Mobile River
in Mobile, Alabama
. Two others went adrift in the Gulf of Mexico, but they were recovered. One platform, originally located 12 mi (20 km) off the Louisiana coast, has washed up onshore at Dauphin Island, Alabama
. Shell Oil Company
's MARS platform, producing around 147000 barrels (23,371.1 m³) per day, was also severely damaged.
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. 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 420000 oilbbl/d. 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. West Texas Intermediate
crude oil futures reached a record high of over $
70 per barrel ($0.44/L). There were many reports to Louisiana authorities and elsewhere of price gouging
, not only for gasoline, but also for other needed items such as bottled water. In some areas, gasoline was being sold for as much as $6 per gallon ($1.59 per liter). One BP station in Stockbridge, Georgia
, south of Atlanta
, was selling gas at $5.87 per gallon ($1.55 per liter) less than a day after Katrina hit. Just before the storm, average fuel prices were approximately $2.50 per US gallon ($0.66/L). International oil prices also rose. In the United Kingdom
, pump prices for unleaded petrol (gas) hit £
1 per litre ($7 per U.S. gallon) for the first time in a significant number of places (averaging about 95p), a rise of about 3% from pre-Katrina prices. Wholesale prices were up 5% by September 6.
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. 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.
to close and evacuate. The Hard Rock Hotel & Casino was scheduled to open the first week of September, but did not open until June 30, 2007. The Beau Rivage was severely damaged by water that reached the third floor, but seems to have suffered the least damage of the beachfront casinos. Grand Casino Biloxi
had its mammoth gaming barge blown across U.S. 90. Treasure Bay's pirate ship was heavily damaged and washed ashore, it was subsequently dismantled down to the underlying barge. The President Casino Biloxi was washed across U.S. 90 and landed on top of a Holiday Inn
, nearly a mile (1.6 km) from the casino's berth.
In Gulfport
, the western Grand Casino Gulfport
barge
, containing Kid's Quest, washed across U.S. 90 and was left blocking the highway. The Copa Casino barge was pushed onto land next to the Grand Casino Gulfport
's parking garage. Casino Magic
and Isle of Capri in Biloxi both suffered heavy damage to their gaming barges, likely beyond repair. Before the storm, at least 14,000 people were employed at Gulf Coast casinos.
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
, 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. The Grand Casino Biloxi is undergoing extensive renovation, and is expected to reopen during the summer of 2006. The Grand Casino Gulfport was destroyed as portions of the structure collapsed across Highway 90 and was demolished.
Mississippi will lose approximately $
500,000 in tax revenue
for each day that the Biloxi
-area riverboat casino
s 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, three years after the hurricane, to the controversial National Basketball Association
Seattle SuperSonics relocation to Oklahoma City
. New Orleans' NBA franchise was forced to move temporarily; the Hornets chose a mix of the Pete Maravich Assembly Center
in Baton Rouge, and the Ford Center in Oklahoma City, Oklahoma
while New Orleans Arena
was being rebuilt. The success of the Hornets in the Ford Center (which the Hornets had a deal where the team would split its games for two years) directly led to Oklahoma City interests purchasing the Seattle SuperSonics, which was for sale, and move to become the Oklahoma City Thunder
in 2008.
(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). 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.
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.
Gulfport, Mississippi
serves as a major ocean shipping
port for the southern United States, which was found to be inoperable for as much as one year. Chiquita
, Dole
, Crowley, Gearbulk, P&O
, and others had significant operations in Gulfport. On a short-term basis these companies have relocated necessary operations to unaffected ports.
Forestry
constitutes a major industry in southern Mississippi, accounting for 10% of all jobs in the state. 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.
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.
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
, Texas and Mississippi
Mississippi
Mississippi is a U.S. state located in the Southern United States. Jackson is the state capital and largest city. The name of the state derives from the Mississippi River, which flows along its western boundary, whose name comes from the Ojibwe word misi-ziibi...
in late August 2005, were far-reaching. As of April 2006, the Bush Administration has sought $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
105 billion for repairs and reconstruction in the region, making it the costliest natural disaster in US history. And this does not account for damage to the economy caused by potential interruption of the oil
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
supply and exports of commodities such as sloths. Also, before Hurricane Katrina
Hurricane Katrina
Hurricane Katrina of the 2005 Atlantic hurricane season was a powerful Atlantic hurricane. It is the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the United States. Among recorded Atlantic hurricanes, it was the sixth strongest overall...
, the region supported approximately one million non-farm jobs, with 600,000 of them in New Orleans
New Orleans, Louisiana
New Orleans is a major United States port and the largest city and metropolitan area in the state of Louisiana. The New Orleans metropolitan area has a population of 1,235,650 as of 2009, the 46th largest in the USA. The New Orleans – Metairie – Bogalusa combined statistical area has a population...
. One study, by Mark Burton and Michael J. Hicks
Michael J. Hicks
Michael J. Hicks is an economist and columnist. He is currently the director of the Center for Business and Economic Research and Associate Professor of Economics at Ball State University..-Early Life & Military Career:...
estimated the total economic impact to Louisiana and Mississippi may exceed $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
150 billion.
Hundreds of thousands of residents of southern Louisiana and Mississippi, including nearly everyone who lived in New Orleans, were left unemployed. No paychecks were being cashed and no money was being spent, and therefore no taxes were being collected by local governments. The lack of revenue will limit the resources of the affected communities and states for years to come. Before the storm, the region was already one of the poorest in America with one of the highest unemployment rates. Furthermore, Jim Sensenbrenner
Jim Sensenbrenner
Frank James Sensenbrenner, Jr. is an American politician who has been a member of the Republican Party in the United States House of Representatives since 1979, representing . The district, the state's richest, includes many of Milwaukee's northern and western suburbs, and extends into rural...
, Republican chairman of the House Judiciary Committee, has refused to allow victims of the hurricane to take advantage of any exception to the recent Bankruptcy Reform, a recent bill passed with widespread support of the banking industry that aims to curb abuse of bankruptcy protection by repeat filers and those who are able to repay debts reasonably. "If someone in Katrina is down and out, and has no possibility of being able to repay 40% or more of their debts, then the new bankruptcy law doesn't apply," Sensenbrenner said.
There was also some concern when, on September 8, 2005, President Bush temporarily suspended the Davis-Bacon Act
Davis-Bacon Act
The Davis–Bacon Act of 1931 is a United States federal law which established the requirement for paying prevailing wages on public works projects...
in the affected areas, which allowed for contractors working on Federal construction projects to be paid less than the prevailing local wage. The concerns over these actions were primarily that allowing the government to pay less than the prevailing wage
Prevailing wage
In government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. Prevailing wages are established by regulatory agencies for each trade and occupation employed in the...
would contribute to increased poverty in the region, which already ranked among the lowest in the nation in terms of household income. The act was later reinstated on October 26, 2005, amid political pressure from both Democrats and Republicans in the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
.
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 crude oil consumed in the United States and almost half of the gasoline produced in the country came from refineries in the states along the Gulf's shores. An additional 24% of the natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
supply is extracted or imported in the region. Furthermore, the nation's Strategic Petroleum Reserve
Strategic Petroleum Reserve
The Strategic Petroleum Reserve is an emergency fuel storage of oil maintained by the United States Department of Energy.- United States :The US SPR is the largest emergency supply in the world with the current capacity to hold up to ....
is also stored in this region.
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
Dick Cheney
Richard Bruce "Dick" Cheney served as the 46th Vice President of the United States , under George W. Bush....
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 substation
Electrical substation
A substation is a part of an electrical generation, transmission, and distribution system. Substations transform voltage from high to low, or the reverse, or perform any of several other important functions...
s in nearby Collins
Collins, Mississippi
Collins is a city in Covington County, Mississippi, United States. The population was 2,761 at the 2005 census. It is the county seat of Covington County....
that were essential to the operation of the Colonial Pipeline
Colonial Pipeline
Colonial Pipeline, headquartered in Alpharetta, Georgia, delivers a daily average of of gasoline, home heating oil, aviation fuel and other refined petroleum products to communities and businesses throughout the South and Eastern United States. Colonial consists of more than of pipeline,...
, which carries gasoline and diesel fuel from Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
to the Northeast
Northeastern United States
The Northeastern United States is a region of the United States as defined by the United States Census Bureau.-Composition:The region comprises nine states: the New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont; and the Mid-Atlantic states of New...
.
At least twenty offshore oil platform
Oil platform
An oil platform, also referred to as an offshore platform or, somewhat incorrectly, oil rig, is a lаrge structure with facilities to drill wells, to extract and process oil and natural gas, and to temporarily store product until it can be brought to shore for refining and marketing...
s were missing, sunk, or had gone adrift, according to the United States Coast Guard
United States Coast Guard
The United States Coast Guard is a branch of the United States Armed Forces and one of the seven U.S. uniformed services. The Coast Guard is a maritime, military, multi-mission service unique among the military branches for having a maritime law enforcement mission and a federal regulatory agency...
. One oil rig, in dock for repairs before the storm, broke loose and hit the Cochrane/Africatown USA road bridge over the Mobile River
Mobile River
The Mobile River is located in southern Alabama in the United States. Formed out of the confluence of the Tombigbee and Alabama rivers, the approximately river drains an area of of Alabama, with a watershed extending into Mississippi, Georgia, and Tennessee. Its drainage basin is the...
in Mobile, Alabama
Mobile, Alabama
Mobile is the third most populous city in the Southern US state of Alabama and is the county seat of Mobile County. It is located on the Mobile River and the central Gulf Coast of the United States. The population within the city limits was 195,111 during the 2010 census. It is the largest...
. Two others went adrift in the Gulf of Mexico, but they were recovered. One platform, originally located 12 mi (20 km) off the Louisiana coast, has washed up onshore at Dauphin Island, Alabama
Dauphin Island, Alabama
Dauphin Island is a town in Mobile County, Alabama , on a barrier island also named Dauphin Island , at the Gulf of Mexico. The population was 1,371 at the 2000 census. The town is included in the Mobile metropolitan statistical area...
. Shell Oil Company
Shell Oil Company
Shell Oil Company is the United States-based subsidiary of Royal Dutch Shell, a multinational oil company of Anglo Dutch origins, which is amongst the largest oil companies in the world. Approximately 22,000 Shell employees are based in the U.S. The head office in the U.S. is in Houston, Texas...
's MARS platform, producing around 147000 barrels (23,371.1 m³) per day, was also severely damaged.
At 7:03 a.m. CDT on August 29, Ted Falgout, Port Director of Port Fourchon, Louisiana
Port Fourchon, Louisiana
Port Fourchon is Louisiana’s southernmost port, located on the southern tip of Lafourche Parish, Louisiana, on the Gulf of Mexico. It is a sea port, with significant petroleum industry traffic from offshore Gulf oil platforms and drilling rigs as well as the Louisiana Offshore Oil Port pipeline...
, 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. 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
Louisiana Offshore Oil Port
The Louisiana Offshore Oil Port is a deepwater port in the Gulf of Mexico off the coast of Louisiana near the town of Port Fourchon. LOOP provides tanker offloading and temporary storage services for crude oil transported on some of the largest tankers in the world. Most tankers offloading at LOOP...
, which imports 11% of all U.S. oil consumption, closed on August 27, and Shell reported a reduction in production of 420000 oilbbl/d. 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. West Texas Intermediate
West Texas Intermediate
West Texas Intermediate , also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. It is a light and sweet crude oil...
crude oil futures reached a record high of over $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
70 per barrel ($0.44/L). There were many reports to Louisiana authorities and elsewhere of price gouging
Price gouging
Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies...
, not only for gasoline, but also for other needed items such as bottled water. In some areas, gasoline was being sold for as much as $6 per gallon ($1.59 per liter). One BP station in Stockbridge, Georgia
Stockbridge, Georgia
Stockbridge is a city in Henry County, Georgia, United States with a population of 25,636 as of the 2010 census. It is the hometown of the multi-platinum selling alternative rock/post-grunge band Collective Soul and home to one of the youngest starting pitchers ever to play for the Atlanta Braves,...
, south of Atlanta
Atlanta, Georgia
Atlanta is the capital and most populous city in the U.S. state of Georgia. According to the 2010 census, Atlanta's population is 420,003. Atlanta is the cultural and economic center of the Atlanta metropolitan area, which is home to 5,268,860 people and is the ninth largest metropolitan area in...
, was selling gas at $5.87 per gallon ($1.55 per liter) less than a day after Katrina hit. Just before the storm, average fuel prices were approximately $2.50 per US gallon ($0.66/L). International oil prices also rose. In the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, pump prices for unleaded petrol (gas) hit £
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
1 per litre ($7 per U.S. gallon) for the first time in a significant number of places (averaging about 95p), a rise of about 3% from pre-Katrina prices. Wholesale prices were up 5% by September 6.
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
Mike Easley
Michael Francis "Mike" Easley is an American politician who served as the 72nd Governor of the U.S. state of North Carolina, from 2001 to 2009. He is member of the North Carolina Democratic Party and became the first North Carolina governor to admit to a felony in a deal that halted a lengthy...
of North Carolina
North Carolina
North Carolina is a state located in the southeastern United States. The state borders South Carolina and Georgia to the south, Tennessee to the west and Virginia to the north. North Carolina contains 100 counties. Its capital is Raleigh, and its largest city is Charlotte...
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. 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
Strategic Petroleum Reserve
The Strategic Petroleum Reserve is an emergency fuel storage of oil maintained by the United States Department of Energy.- United States :The US SPR is the largest emergency supply in the world with the current capacity to hold up to ....
, 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
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
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 casinos along the Mississippi Gulf CoastMississippi Gulf Coast
The Mississippi Gulf Coast refers to the three Mississippi counties which lie on the Gulf of Mexico: Hancock, Harrison and Jackson counties.The region was severely damaged by Hurricane Camille in 1969 and again by Hurricane Katrina in 2005....
to close and evacuate. The Hard Rock Hotel & Casino was scheduled to open the first week of September, but did not open until June 30, 2007. The Beau Rivage was severely damaged by water that reached the third floor, but seems to have suffered the least damage of the beachfront casinos. Grand Casino Biloxi
Grand Casino Biloxi
Grand Biloxi Casino Hotel and Spa is the name of a gambling establishment in Biloxi, Mississippi. It is owned and operated by Caesars Entertainment.This facility replaces the former Grand Casino Biloxi, which was destroyed by Hurricane Katrina...
had its mammoth gaming barge blown across U.S. 90. Treasure Bay's pirate ship was heavily damaged and washed ashore, it was subsequently dismantled down to the underlying barge. The President Casino Biloxi was washed across U.S. 90 and landed on top of a Holiday Inn
Holiday Inn
Holiday Inn is a brand of hotels, formally a economy motel chain, forming part of the British InterContinental Hotels Group . It is one of the world's largest hotel chains with 238,440 bedrooms and 1,301 hotels globally. There are currently 5 hotels in the pipeline...
, nearly a mile (1.6 km) from the casino's berth.
In Gulfport
Gulfport, Mississippi
Gulfport is the second largest city in Mississippi after the state capital Jackson. It is the larger of the two principal cities of the Gulfport-Biloxi, Mississippi Metropolitan Statistical Area, which is included in the Gulfport-Biloxi-Pascagoula, Mississippi Combined Statistical Area. As of the...
, the western Grand Casino Gulfport
Grand Casino Gulfport
Grand Casino Gulfport was the name of a gambling establishment in Gulfport, Mississippi . It was owned and operated by Harrah's Entertainment. Prior to its destruction by Hurricane Katrina, the casino had two hotels with a total of 1,000 rooms, and a casino.-History:Prior to 2005, Grand Casino...
barge
Barge
A barge is a flat-bottomed boat, built mainly for river and canal transport of heavy goods. Some barges are not self-propelled and need to be towed by tugboats or pushed by towboats...
, containing Kid's Quest, washed across U.S. 90 and was left blocking the highway. The Copa Casino barge was pushed onto land next to the Grand Casino Gulfport
Grand Casino Gulfport
Grand Casino Gulfport was the name of a gambling establishment in Gulfport, Mississippi . It was owned and operated by Harrah's Entertainment. Prior to its destruction by Hurricane Katrina, the casino had two hotels with a total of 1,000 rooms, and a casino.-History:Prior to 2005, Grand Casino...
's parking garage. Casino Magic
Casino Magic Biloxi Casino & Hotel
Casino Magic Biloxi Casino & Hotel was a permanently moored casino barge located on Casino Row, along the Mississippi Gulf Coast in Biloxi, Mississippi with an adjoining 378 room hotel located on of land. The property is now owned by Harrah's Entertainment....
and Isle of Capri in Biloxi both suffered heavy damage to their gaming barges, likely beyond repair. Before the storm, at least 14,000 people were employed at Gulf Coast casinos.
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
Mardi Gras
The terms "Mardi Gras" , "Mardi Gras season", and "Carnival season", in English, refer to events of the Carnival celebrations, beginning on or after Epiphany and culminating on the day before Ash Wednesday...
, and the Beau Rivage Resort and Casino in Biloxi, Mississippi
Biloxi, Mississippi
Biloxi is a city in Harrison County, Mississippi, in the United States. The 2010 census recorded the population as 44,054. Along with Gulfport, Biloxi is a county seat of Harrison County....
, reopened on August 29, 2006, on the one year anniversary of Hurricane Katrina's landfall. The Grand Casino Biloxi is undergoing extensive renovation, and is expected to reopen during the summer of 2006. The Grand Casino Gulfport was destroyed as portions of the structure collapsed across Highway 90 and was demolished.
Mississippi will lose approximately $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
500,000 in tax revenue
Tax revenue
Tax revenue is the income that is gained by governments through taxation.Just as there are different types of tax, the form in which tax revenue is collected also differs; furthermore, the agency that collects the tax may not be part of central government, but may be an alternative third-party...
for each day that the Biloxi
Biloxi, Mississippi
Biloxi is a city in Harrison County, Mississippi, in the United States. The 2010 census recorded the population as 44,054. Along with Gulfport, Biloxi is a county seat of Harrison County....
-area riverboat casino
Riverboat casino
A riverboat casino is a type of casino found in several areas of the United States which use a riverboat as a casino. Several states authorized this type of casino to limit the areas where casinos could be constructed under a type of legal fiction.-History:...
s 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
Nevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...
and New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
($10.3 billion and $4.8 billion, respectively).
Katrina was directly related, three years after the hurricane, to the controversial National Basketball Association
National Basketball Association
The National Basketball Association is the pre-eminent men's professional basketball league in North America. It consists of thirty franchised member clubs, of which twenty-nine are located in the United States and one in Canada...
Seattle SuperSonics relocation to Oklahoma City
Seattle SuperSonics relocation to Oklahoma City
The Seattle SuperSonics relocation to Oklahoma City was a successful effort by the ownership group of the Seattle SuperSonics to move the team to Oklahoma City...
. New Orleans' NBA franchise was forced to move temporarily; the Hornets chose a mix of the Pete Maravich Assembly Center
Pete Maravich Assembly Center
Pete Maravich Assembly Center is a 13,472-seat multi-purpose arena in Baton Rouge, Louisiana. The arena opened in 1972. It is home to the Louisiana State University Tigers and Lady Tigers basketball teams. It was originally known as the LSU Assembly Center, but was renamed in memory of Pete...
in Baton Rouge, and the Ford Center in Oklahoma City, Oklahoma
Oklahoma City, Oklahoma
Oklahoma City is the capital and the largest city in the state of Oklahoma. The county seat of Oklahoma County, the city ranks 31st among United States cities in population. The city's population, from the 2010 census, was 579,999, with a metro-area population of 1,252,987 . In 2010, the Oklahoma...
while New Orleans Arena
New Orleans Arena
New Orleans Arena is an indoor arena in New Orleans, Louisiana. It is located in the city's Central Business District, adjacent to the Mercedes-Benz Superdome....
was being rebuilt. The success of the Hornets in the Ford Center (which the Hornets had a deal where the team would split its games for two years) directly led to Oklahoma City interests purchasing the Seattle SuperSonics, which was for sale, and move to become the Oklahoma City Thunder
Oklahoma City Thunder
The Oklahoma City Thunder are a professional basketball franchise based in Oklahoma City, Oklahoma. They play in the Northwest Division of the Western Conference in the National Basketball Association ; their home court is at Chesapeake Energy Arena....
in 2008.
Agriculture and forestry
According to the United States Department of AgricultureUnited States Department of Agriculture
The United States Department of Agriculture is the United States federal executive department responsible for developing and executing U.S. federal government policy on farming, agriculture, and food...
(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). 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.
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.
Gulfport, Mississippi
Gulfport, Mississippi
Gulfport is the second largest city in Mississippi after the state capital Jackson. It is the larger of the two principal cities of the Gulfport-Biloxi, Mississippi Metropolitan Statistical Area, which is included in the Gulfport-Biloxi-Pascagoula, Mississippi Combined Statistical Area. As of the...
serves as a major ocean shipping
Shipping
Shipping has multiple meanings. It can be a physical process of transporting commodities and merchandise goods and cargo, by land, air, and sea. It also can describe the movement of objects by ship.Land or "ground" shipping can be by train or by truck...
port for the southern United States, which was found to be inoperable for as much as one year. Chiquita
Chiquita Brands International
Chiquita Brands International Inc. is an American producer and distributor of bananas and other produce, under a variety of subsidiary brand names, collectively known as Chiquita. Other brands include Fresh Express salads, which it purchased from Performance Food Group in 2005...
, Dole
Dole Food Company
Dole Food Company, Inc. is an American-based agricultural multinational corporation headquartered in Westlake Village, California. The company is the largest producer of fruits and vegetables in the world, operating with 74,300 full-time and seasonal employees who are responsible for over 300...
, Crowley, Gearbulk, P&O
Peninsular and Oriental Steam Navigation Company
The Peninsular and Oriental Steam Navigation Company, which is usually known as P&O, is a British shipping and logistics company which dated from the early 19th century. Following its sale in March 2006 to Dubai Ports World for £3.9 billion, it became a subsidiary of DP World; however, the P&O...
, and others had significant operations in Gulfport. On a short-term basis these companies have relocated necessary operations to unaffected ports.
Forestry
Forestry
Forestry is the interdisciplinary profession embracing the science, art, and craft of creating, managing, using, and conserving forests and associated resources in a sustainable manner to meet desired goals, needs, and values for human benefit. Forestry is practiced in plantations and natural stands...
constitutes a major industry in southern Mississippi, accounting for 10% of all jobs in the state. 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
Laurel, Mississippi
Laurel is a city located in Jones County in Mississippi, a state of the United States of America. As of the 2000 census, the city had a total population of 18,393 although a significant population increase has been reported following Hurricane Katrina. Located in southeast Mississippi, southeast of...
, with heavy damage to pine forests in Hancock
Hancock County, Mississippi
-Demographics:As of the census of 2000, there were 42,967 people, 16,897 households, and 11,827 families residing in the county. The population density was 90 people per square mile . There were 21,072 housing units at an average density of 44 per square mile...
, Harrison
Harrison County, Mississippi
-National protected areas:* De Soto National Forest * Gulf Islands National Seashore - Demographics :As of the census of 2000, there were 189,601 people, 71,538 households, and 48,574 families residing in the county. The population density was 326 people per square mile . There were 79,636 housing...
, and Pearl River
Pearl River County, Mississippi
-National protected areas:*Bogue Chitto National Wildlife Refuge *De Soto National Forest -Demographics:The census estimates of 2006 place the county population over 57,000 and place it among the 10 fastest growing counties in the U.S. As of the census of 2000, there were 48,621 people, 18,078...
countries.
An estimated 14.6 million cords (52,900,000 m³) of paperwood and 3.2 billion board feet
Board foot
The board-foot is a specialized unit of measure for the volume of lumber in the United States and Canada. It is the volume of a one-foot length of a board one foot wide and one inch thick....
(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.
Utilities
The local electric utility Entergy Corporation was impacted severely, and Entergy New Orleans filed for bankruptcy protection on September 23, 2005. The company cited lower revenue and storm restoration costs as the primary cause. Parent company Entergy Corporation promptly arranged $100 million in financing.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.
See also
- Damage to infrastructure by Hurricane Katrina
- Economic impact analysisEconomic impact analysisEconomic impact analysis examines the effect of a policy, program, project, activity or event on the economy of a given area. The area can range from a neighborhood to the entire globe...
- Hurricane Katrina effects by regionHurricane Katrina effects by regionThis article covers the Hurricane Katrina effects by region, within the United States and Canada. The effects of Hurricane Katrina, in August 2005, were catastrophic and widespread. It was one of the deadliest natural disasters in U.S. history, leaving 1836 people dead, and a further 705 missing....
- Oil price increases since 2003