The impact of Hurricane Katrina on the economy Essay

The impact of Hurricane Katrina on the economy - Essay Example There are some strategies implemented to overcome the disaster caused to the economy by this hurricane. Hurricane Katrina has affected the Gulf of Mexico, New Orleans and Louisiana, which is the main hub of nation's oil, gas production and distribution. It severely damaged the oil production and refining facilities in these areas crippling the oil and gas production of the country. The fuel produced by the country is a contributing factor to the economic growth of a country. The damage of such a resource has its implications of various sectors. Although, there is sometime required to estimate the damage caused by this hurricane, predications are made about the potential loss that the economy will incur. Hurricane Katrina has resulted in the increase in prices of gasoline and other oil products. The damage of oil production and refining facilities has resulted in high demand of gasoline. The prices of fuel have increased by about by 15 times. [Hurricane Katrina's impact on US economy should not be overestimated, 2005]. Because of this increase in price, there are various industries, which are predicted to be affected by this calamity. This damage caused to the oil and gas production of the country is likely to affect the import and export of goods, retail market, real estate business and large organizations. [Little, 2005]. Gulf of Mexico comprises of about 30 percent oil production, 20 percent of the gas production and 60 percent of the oil imports in the U.S. [Samuelson, 2005]. This increase in the oil and gasoline price has affected the import and export of goods. Oil and gasoline is essential for transportation of products into and outside the country. The devastation caused to the oil and refinery productions in these areas have affected the transportation of the grains and goods outside the country and inflow of coffee and cargo into the country. [Hurricane Katrina's impact on US economy should not be overestimated, 2005]. However, there is a consolation that most of the import and export of goods occur after the fall so it has not causes a major damage to the foreign trade. [Samuelson, 2005] The increase in the price of the fuel has resulted in increase in price of every petrol-chemical and other related product. For instance, due to the increase in crude oil, the price of home heating products is expected to reach a soaring height during the winter season. [Little, 2005]. The hurricane has also affected the *retail market. There is increase in price on most of the products as a result the consumer budget is being affected. Most of the people spend large amount of money on the fuel due to the increase in prices of the fuel, while there is no increase in their salary or wages. As a result, they are unable to purchase high priced products. This will tend to affect the retail sales. *Consumer spending accounts to about two-thirds of the economy due to which a recession is forecasted in the economy. [Little, 2005]. The real estate business will make huge profits due to the hurricane. The hike in prices of the fuel and the shortage of building material in the country will result in increase in the value of the land and