Reply #28: Gas at $3.50 a gallon could trigger recession [View All]

[ozymandius]

Assessing Katrina's long-term impact
Gas at $3.50 a gallon could trigger recession

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"There is a real sense of foreboding about the economy now that Katrina has struck with full force," said Bernard Baumohl, executive director of Economic Outlook Group. "The Louisiana and Mississippi Gulf region represent the soft underbelly of the U.S. energy industry."

Katrina took aim at a vulnerable chokepoint for U.S. energy markets. The region not only produces a large percentage of domestic oil and gas, it is also a transportation hub for both imported and domestic production.

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Oil, gas production

Even in the best-case scenario, production of crude petroleum, natural gas and refined gasoline are likely to be severely stunted for at least several weeks as Gulf production and refineries go back on line.

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The impact of Katrina may be felt not just in the devastated Gulf region, but throughout the nation as energy prices soar. There's no insurance policy or government grant to offset the cost of $3.50 a gallon gasoline.

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