The Gulf Coast Hurricanes: Assessing the Economic Impact

Hurricanes Katrina and Rita could not have come at a worse time for U.S. consumers and businesses. Katrina disrupted energy supplies at a time when the balance between supply and demand was already precarious. Hurricane Rita’s impact was less than Katrina’s because it largely spared the chemical and petro-chemical facilities in the region. Conservation measures, improved efficiency in manufacturing process, and the overall shift towards a service economy in the United States have resulted in energy playing a smaller role in U.S. GDP. Producing a dollar of GDP requires less energy now, which lessens the impact of higher energy prices.

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