Hurricane Katrina roared through Louisiana, Mississippi, Alabama and touched a few other states this week. The devastation is total. Many lives were lost; property damage in the billions and a toxic wasteland will be left in its wake.
Government response was shamefully poor, and the agencies that are overpaid to over plan for such disasters were rendered impotent. Although other countries offered to help, the President of the United States refused it.
People now talk about rebuilding the cities discounting the toxicity of the air, water, buildings and land. Chemical plants, oil refineries, dead bodies, sewerage, dead animals are only the tip of the toxic iceberg.
For the past thirty years or so there has been a strong environment movement and education taking place in the United States. There has also been a new spiritual movement incorporating respect and understanding of the planet, Gaia - Earth. Many people, politicians, religions have chosen to ignore the work of Nobel prize winning scientists on runaway global warming and destruction. Humankind has chosen to ignore common sense when building on or over nature.
In the days that followed hurricane Katrina, America and its economy had been changed dramatically. One of the most evident changes that occurred as a result of the storm was the nation's unemployment rate. A month prior to the storm, the national unemployment rate was at 4.9%. However, shortly after hurricane Katrina swept through America, the national unemployment rate increased to 5.1%. It was estimated that nearly 400,000 individuals lost their jobs as a result of the storm.
Not only did this sudden increase in the unemployment rate cause for hundreds of thousands to loose their jobs, it also caused a decrease in the quantity of goods and services produced by our country. In New Orleans, three major oil pipes had to be shut down in order to safely repair the damage. As a result, 6,160,000 gallons of oil were lost just within the first week of repairs. In addition, many US refining sectors along the Gulf Coast had to be closed. As a result, our nation's daily refining capacity was reduced by 1.8 million barrels a day, or 11%.
The sudden changes in the unemployment rate and the production rate had a major impact on the price of goods and services. Just after hurricane Katrina, the price of goods and services increased significantly. The price of goods such as gasoline and agricultural products sharply increased. In the month that followed, the cost of gasoline jumped 46 cents a gallon, putting the average price of gas at $3.06 per gallon. The cause behind this sudden increase in prices was triggered by a shift in America's long-run aggregate supply curve. When the unemployment rate increased, the economy began producing a smaller quantity of goods and services. As a result, the long-run aggregate-supply curve shifted to the left. Similarly, this shift would cause for the short-run aggregate-supply curve to shift to the left as well. When you graph out the ...