Hurricane Katrina — August 29, 2005
Costliest US natural disaster and the oil price shock
Hurricane Katrina devastated the Gulf Coast, causing $125 billion in damage. The storm shut down over 40% of Gulf crude production, sending WTI past $70/barrel for the first time. The S&P 500 declined roughly 3-4% in the weeks following but recovered to its pre-storm high within two months.
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
WTI jumped nearly $5 in a single session. Gasoline hit a record $3.04/gallon. Both normalized within months.
Katrina devastated the Gulf Coast but the rest of the economy was largely unaffected.
Even the costliest natural disaster in US history produced only a single-digit equity drawdown.
Natural disasters have historically repriced energy and insurance far more than the broad index — Katrina's oil spike mean-reverted within months and the S&P 500 recovered in two. Consider stress-testing concentrated regional real estate, insurance, or energy positions against disaster scenarios instead of adjusting the diversified core.