Hurricane Katrina’s impact on the U.S. is as much economic as it is physical, driving oil prices to new records and forcing stocks on Wall Street to open lower.
U.S. stock futures fell as the storm blew into the Gulf of Mexico, blasting refineries and leaving corporations concerned that ever-rising fuel costs would further erode profits and economic growth. Meanwhile, stocks fell in Asian and European markets as well, as traders there worried about the storm’s impact.
Insurers were particularly worried. Bloomberg reported shares of insurance giants Allstate and American International Group Inc. retreated on speculation Katrina could be the most expensive storm ever to hit the U.S. Damages, they say, could be in excess of $20 billion.
Other industries were impacted as well. CNN/Money reported Goodyear shares fell about 3 percent, while Caterpillar was off more than 1 percent on fears profits would be hard-hit due to higher energy and production costs.
Analysts said because the U.S. gets more than 30 percent of its oil from the Gulf of Mexico, the storm is having an inordinate impact on prices.
“This is the worst possible time because we have no excess capacity in energy production in the world,” Donald Coxe, global portfolio strategist for Bank of Montreal in Chicago, told Bloomberg.