WASHINGTON, 3 September 2005 — Economic losses from Hurricane Katrina’s deadly carnage could top $100 billion, forecasters said yesterday as oil and port operators battled to resume operations battered by the terrifying storm.
Risk Management Solutions said at least half the losses are expected to come from flooding in New Orleans, wind damage and coastal surges, tattered infrastructure and indirect economic effects.
RMS, a consultant for the insurance and finance industries, said the New Orleans disaster “has developed into the most damaging flood in US history”, with at least 150,000 properties inundated.
The $100 billion figure would dwarf previous natural disasters in the United States, forecasters said, and could rival losses from the terror attacks of Sept. 11, 2001.
In terms of insurance losses alone, industry forecasters have said Katrina could entail payouts of at least $25 billion. But RMS said those forecasts did not take into account the mammoth costs of rebuilding New Orleans, much of which is now a swimming pool after levees protecting the city from a lake and the Mississippi River collapsed.
Hurricane Andrew caused insurance losses of about $21 billion in today’s prices when it swept through the southeastern United States in 1992. Its damage was far less sweeping than Katrina. In contrast, insurance losses from the Sept. 11 attacks have been put at more than $20 billion.
Katrina has been so devastating because aside from leveling New Orleans and the surrounding area, it affected major oil refineries, ports, pipelines and highways connecting the region to the rest of the country.
“This is far and away off the charts in terms of other natural disasters,” Global Insight spokesman Jim Dorsey said.
“9 11 saw some of the most valuable real estate in the world destroyed but we’re still not sure what the total impact has been,” he said.
Global Insight believes insured losses from Katrina will top $25 billion.
“But a lot of folks down there are uninsured so it’s conceivable that the real loss figure could double or triple to upward of $75 billion,” Dorsey said.
“Then with the total impact thrown in, the figure for damages should be much higher than that.”
Katrina’s fury has had a direct impact already on petrol pump prices across the United States, with gasoline now topping $3 a gallon (3.78 liters) in many areas.
Some gas stations are running dry because of panic buying and shortages, according to motorists’ organizations.
However, there were signs of recovery in the hurricane-hit area yesterday as the oil industry limped back to life.
Louisiana’s main oil port resumed pumping and the major Plantation pipeline was 95 percent back up and running, officials said.
The Louisiana Offshore Oil Port (LOOP) began unloading its first supertanker since Hurricane Katrina swept through.
Officials said the Plantation pipeline, one of the country’s biggest with the capacity to channel some 620,000 barrels a day, will be fully operational once electricity comes back online at its two smaller pumping stations.
According to the latest government figures Thursday, nine major Gulf Coast refineries that normally process 10 percent of the country’s crude are shut down.
Economists predict that Katrina will knock half a percentage point off US growth in the third and fourth quarters. That could rise if refineries and other vital installations remain shut down for long, they say.
“Katrina is very big and, in economic terms, very deep,” Cumberland Advisors Chairman David Kotok said.