Gustav's Economic Impact Could Ripple Far Beyond the Gulf

WASHINGTON - From gasoline and natural gas to insurance rates and shipping costs, Hurricane Gustav's blow to the Gulf Coast economy will be felt far beyond the storm zone — the only question, economists said Monday, is how hard.

The Gulf Coast produces about a quarter of the nation's oil and 15 percent of its natural gas, refines a third of its gasoline and handles much of its grain exports through the Port of New Orleans. All of it sat in Gustav's path Monday.

Insurers face claims that early modeling firms estimated at $4 billion to $10 billion if the storm stays on its forecast track — significant, but a fraction of Katrina's $40 billion-plus insured toll, which remains the costliest in U.S. history.

The storm lands on an economy already on its knees: housing in its worst slump in decades, unemployment at 5.7 percent and rising, and the government scrambling to steady mortgage giants Fannie Mae and Freddie Mac.

"The economy can absorb a Gustav if the energy infrastructure escapes major damage," an economist at Moody's Economy.com said. "What it cannot afford is a repeat of 2005, when Katrina and Rita together knocked out refineries for months."

The government said it would expedite disaster loans to small businesses and stood ready to release oil from the Strategic Petroleum Reserve to keep refiners supplied.

For New Orleans, still rebuilding, the stakes are existential. The city's tourism industry, which clawed back to near pre-Katrina levels this year, emptied its hotels on the weekend before what should have been a lucrative Labor Day.

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Associated Press writers contributed to this report.

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