Economic Hurricane09.01.2005 | Energy and Environment, Business, ResearchThe local economic impact of Hurricane Katrina will be difficult to predict until there has been an accurate assessment of the long-term damage to the Gulf Coast's refinery capacity, said Richard Stock, director of the University of Dayton's Business Research Group and an expert on the Dayton-area economy.
If the hurricane caused a great deal of damage to the Gulf Coast's refinery capacity, prices for such consumer goods as gasoline likely will rise substantially, he said. On the other hand, if the damage is manageable, gas prices likely will remain slightly elevated at around $3 to $3.25 a gallon.
Yet the local economy could suffer even if those slightly elevated prices stick around for very long.
"I've seen estimates that suggest if those price increases in gasoline persist, then we could see one percentage point shaved off the nation's economic growth rate in this quarter," Stock said. "The Dayton-area economy hasn't been growing in pace with rest of country, so moving from a 3 percent growth rate to a 2 percent rate will affect job growth.
"Plus, persistence in high prices would hit the market for SUVs, which would be a problem for the General Motors Moraine plant," Stock added.
The long-term economic impact of Katrina will be difficult to separate from other ongoing challenges to the local economy — particularly the significant decline in manufacturing jobs from which the region has yet to recover.
Since Hurricane Katrina is a natural disaster unlike any the United States has faced previously, it's even more difficult to predict the storm's long-term economic impact.
"People will be tempted to compare it to the oil boycott of 1979, but this is fundamentally different because the real serious issue here is the potential damage to refinery capacity," Stock said. "Plus it's not as bad as it would have been in 1979 or 1980, because our dependence on oil is not as severe.
"But a blow to a metropolitan economy like New Orleans is major," he added. "If you pull one thing out of the infrastructure, it has all kinds of implications for the economy that are difficult to predict. You're suddenly wiping out some integral part of the overall national economy for at least a month."
For media interviews, contact Richard Stock at (937) 229-2453. After noon on Friday, Sept. 2, Stock can be reached at (937) 241-5392.