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NEW ORLEANS -- Aside from the approximately eight lives claimed in the U.S., Hurricane Gustav also could wind up costing $10 billion in damages, although total losses will not be known for weeks or possibly months.
What was feared as a Category 4 storm, Gustav made landfall near Cocodrie, La., about 70 miles southwest of New Orleans, Monday morning as a relatively fast-moving Category 2 hurricane.
"The fears were that Gustav might be a repeat of Hurricane Katrina," Peter Daily, director of atmospheric science at the catastrophe risk modeling firm AIR Worldwide Corp. in Boston, told The Associated Press. "Gustav, however, was both smaller and weaker."
While the storm was less intense than expected, it didn’t stop what might be Louisiana’s record for evacuation with nearly two million residents fleeing the greater New Orleans area as the storm approached.
According to early estimates from the Newark, Calif.-based Risk Management Solutions Inc., losses on land range from $3 billion to $7 billion, and oil-drilling damage is at about $1 billion to $3 billion.
Last week, as news of the storm intensified, oil prices began to climb. In the wake of Gustav passing, oil slid to around $108 a barrel yesterday after early reports showed Hurricane Gustav spared major U.S. Gulf oil facilities, reported Reuters. U.S. crude was $107.96 a barrel, down $7.50 from last week’s close. It sank to a session low of $105.46, marking the lowest point since April 2, Reuters reported.
U.S. refiners located in the Gulf reported no serious damage. However, approximately 1.3 million barrels per day (bpd) of offshore oil production and roughly 2.67 million bpd of refining capacity were ceased due to the storm. The Gulf is home to 25 percent of U.S. oil output and more than a third of U.S. refining capacity.
Louisiana Governor Bobby Jindal told Reuters earlier this week Exxon Mobil Corp. would ask for crude oil from the U.S. emergency supply on Tuesday and Shell Oil Co. was expected to make a similar request.
As Gulf residents begin the clean up and rebuilding efforts, analysts warn of Tropical Storms Hanna, Ike and Josephine, one of which is expected to hit the Atlantic region later this week.