As Hurricane Ida battles down on Louisiana, Americans could see the storm’s economic impact on gas and oil prices. Ida's impact should be much less than Hurricane Katrina in 2005.
Louisiana supplies much of the nation's oil and gas.
According to the Energy Information Administration, there are 17 oil refineries in Louisiana that account for about one-fifth of the country’s refining capacity. The Colonial Pipeline, which is used to transport gasoline to the East Coast from the Gulf Coast, is right in Ida’s path.
Before the storm made landfall on Aug. 29, most offshore platforms and floating rigs in the Gulf of Mexico were evacuated. Over 95 percent of oil production and almost 94 percent of gas production in the Gulf was closed down until the storm passed, the Bureau of Safety and Environmental Enforcement (BSEE) said in a statement.
ExxonMobil has three facilities in the Gulf Coast region in Baytown, Beaumont, and Baton Rouge. Although the Baytown and Beaumont refineries and chemical complexes continued operating normally, the company shut down the Baton Rouge facility.
“We are working with our independent distributors and wholesale fuels customers to help meet consumer demand for fuel. We appreciate the patience of those impacted by this situation and will keep you informed as the situation evolves,” ExxonMobil said in an Aug. 29 statement.
In the days before the storm hit, the oil company produced 6.5 million gallons of fuel from the Baton Rouge facility.
The storm also threatens a large number of chemical and plastic companies in the region. After the storm passes, the production from undamaged facilities will be brought back online immediately, BSEE officials say.
Analysts say that Hurricane Ida's impact on gas prices will be slight.
Some analysts think that Hurricane Ida's impact on gas and energy prices should be slight and temporary. In an interview with AP News, Moody’s Analytics Chief Economist Mark Zandi said increases at the gas pump should only last a few weeks.
“The worst-case scenario is Ida might add 10 cents to 20 cents to the price of a gallon of gas through September,” Zandi told AP News.
Hurricane Ida could cost insurers up to $20 billion.
With winds reaching up to 150 mph, Hurricane Ida is one of the most powerful storms to hit Louisiana and the Gulf Coast region. The storm could cost insurers between $15 billion and $20 billion, Bloomberg reports.
“It could be some time before a full picture of insured losses emerges, but, at this point, we are not expecting a ‘worst case’ loss, though we would expect a sizable total,” RBC Capital Markets’ Mark Dwelle told Bloomberg.
Hurricane Katrina was the most expensive disaster in U.S. history.
Coincidentally, Hurricane Ida hit landfall on the 16th anniversary of 2005’s Hurricane Katrina. Although Ida will have some economic impact, it pales compared to Hurricane Katrina, which was the most expensive natural disaster in U.S. history. Katrina cost insurers an estimated $65 billion in property loss, which equates to almost $87 billion currently.