Hurricane Ida is expected to be a lot less harmful to the U.S. economy than Hurricane Katrina although extended oil production shutdowns could increase the toll.

Analysts at financial consultancy Boenning & Scattergood estimate losses for the insurance industry will hit around $10 billion, one-tenth of the $90 billion-plus in insured losses from Katrina, while economists see only a minimal impact on economic growth.

The storm that pummeled Louisiana on Sunday could cause a 0.2% drag on GDP in the third quarter, according to RSM chief economist Joseph Brusuelas. At Moody’s, chief economist Mark Zandi said the disruptions caused by Ida will likely lead him to downgrade his GDP forecast by a few tenths of a percentage point.

“The key channel for Ida to impact the broader economy is through energy prices,” he told the Associated Press. “We will have to see how much damage occurred to production in the Gulf and how long that production will stay offline.”

Ida is tied for the fifth-strongest hurricane ever to hit the mainland but a lower storm surge, New Orleans’ improved levee system, and Ida’s wind-field, which is smaller than Katrina’s, are tempering damage estimates.

“Early indications are that [oil] refineries along the Gulf Coast were spared the magnitude of damage they suffered during Hurricane Harvey in 2017,” the AP reported.

Oil production in the U.S. Gulf of Mexico on Monday remained largely halted in the aftermath of Ida and some 94% of average natural gas production in the region was shut down.

“The worst-case scenario is Ida might add 10 cents to 20 cents to the price of a gallon of gas through September,” Zandi said. But he suggested that the increase in pump prices might last for only a few weeks.

Richard Joswick, an oil analyst with S&P Global Platts, sees nothing like the impact of Katrina, when the average retail price jumped more than 70 cents in just over a week, according to government figures.

“This is a much more modest event,” he said. “We’ll likely recover in a week or two.”

Photo by Brandon Bell/Getty Images

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