The damage from Hurricane Katrina to the Gulf of Mexico’s oil and gas production facilities has had a huge impact on national and international oil and gas markets over the past two months. However, from a regional standpoint, the biggest economic impact from Katrina has been the loss of thousands of jobs, particularly in small businesses. A couple of recent articles reporting on the latest governmental statistics and reports from lending institutions provide a clearer picture of the extent of the economic carnage.
Two NY Times articles (here and here) from last week report on the extraordinary job losses in the Gulf Coast region resulting from the hurricane and the effect that such job loss is having on cities and financial institutions in the region. Louisiana and Mississippi lost a combined total of 310,000 jobs in September, which raised their unemployment rates to a United States high of 11.5% and 9.6% respectively. These are staggering job losses for the region, and since most the losses are attributable to small businesses that were either uninsured or underinsured in regard to damage from the hurricane, the restoration of those jobs will be a painfully slow process.

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Hurricane Wilma came ashore yesterday afternoon directly on the popular Mexican resort communities of Cozumel and Cancun as a devastating category 4 storm. Although damage reports are still skimpy because of poor communications to the area, there is high probability that both of these communities and the surrounding area will suffer catastrophic damage that in some cases will take years to rebuild. Suffice it to say that this area will not likely be in a position to accomodate tourists for an extended period of time. Jeff Masters puts the situation in perspective:

Wilma’s landfall will bring enormous devastation to the 40 to 70 mile wide section of coast exposed to the intense winds of the hurricane’s eyewall. A long period of calm lasting up to seven hours will accompany the passage of the slow-moving eye. During the next two days, Wilma will move very slowly over or just offshore the Yucatan. This will expose structures in the hurricane zone to very long duration hurricane force winds, likely making Wilma Mexico’s most expensive hurricane disaster ever. Wilma’s rains will add to the misery, reaching 20 inches or more over not just the Yucatan, but the western tip of Cuba as well.

Although the current track of the storm into Florida on Monday is still unclear, the current predictions are that it will not be a major hurricane (cat 3 or above) by the time that it makes landfall in Florida. That’s good news for Florida and the U.S., but not much consolation for our friends in Mexico.