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Hurricane Katrina, one of the worst natural disasters in the US history which hit the US one week ago and caused massive damage in the Gulf of Mexico areas, has a major impact on the US economy but at the same time one should not overestimate it.
What is the loss caused by Katrina? No one knows for sure as yet because many of the hurricane-stricken areas are still under water and people are searching and counting the dead which many people think are numbered by thousands.
At the same time, the hurricane damaged most of the oil producing and refining facilities in the Gulf Coast and disrupted the oil shipping and supplying in some areas, resulting the soaring of prices of gasoline and other oil products.
The gulf area supplies roughly one-quarter of US domestic oil and natural-gas demand. About 16 percent of the nation's refinery capacity is based in hurricane-hit Louisiana, with 12 percent in the New Orleans area.
As a result of loss of oil supply caused by the disaster, the average retail price of regular gasoline in the US soared to a new record high of US$3.069 a gallon this week, up by 45.9 US cents comparing with the prices last week, the US Department of Energy reported on Tuesday.
The storm's economic impact is being felt by consumers and businesses around the country because the Gulf Coast region is an essential hub for oil and gas production and distribution. The area also is home to vital shipping and transportation links that allow grain and other goods to flow out of the country and coffee and other cargo to flow in.
The economic hit from Hurricane Katrina keeps growing, with some experts now saying it is likely to top US$100 billion and could go much higher.
To reduce the impact on the economy, the US government has earmarked a relief fund of US$10.5 billion for the disastrous area and US President George W. Bush will seek approval from the Congress on an additional funding of US$40 billion as part of the ongoing spending plan for hurricane-relief efforts.
Meanwhile, no one should overestimate the hurricane's impact on the US economy.
US Treasury Secretary John Snow said late Tuesday that the economy could see a loss of about one-half percentage point in growth this year but that growth would be boosted by about one-half percentage point next year because of the rebuilding activity.
"I am confident about the American economy," he told reporters.
The US economy's shock absorbers kicked in within days of the natural disaster, offered the hope that the massive jolt to the US economy's energy and transportation systems will not produce a long-lived, serious economic contraction, the Wall Street Journal reported on Tuesday.
The release of strategic petroleum reserve and oil products by the US and other western countries has sent the prices of crude oil to about pre-hurricane levels now, hoping to help stabilize the oil market and even pull down the prices further.
One of the most important factors is that the US economy is much more energy-efficient now than about 25 year ago.
The US gross domestic product is more than doubled since 1979, but petroleum consumption has risen by just nine percent, according to the US Energy Department.
The US economy has withstood well the sharp rise in energy costs over the past two years as well as other economic shocks in the past dozen years because of its increasing flexibility, US Federal Reserve (Fed) Chairman Alan Greenspan said at the end of last month.
There is no doubt that the US economy will withstand another impact caused by Hurricane Katrina without sharply slowing down its growing pace.
(Xinhua News Agency September 7, 2005)
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