Contessa Brewer: Joining me to discuss how the damage from Katrina could affect the economy, from Washington is David Wessel, deputy bureau chief of the Wall Street Journal. David, nice to see you today.

David Wessel: Nice to see you.

Contessa Brewer: So how much has hurricane Katrina affected oil and gas production here?

David Wessel: Well, the, the Gulf of Mexico, as you point out, is a very important center of oil exploration and production. And even more important it's a port for importing oil and other energy materials into the United States. So the reason oil prices has spiked is because their concerns that the supply will be disrupted. We won't really know how bad it is for a few days till we assess the damage. But we're very vulnerable there as you point out.

Contessa Brewer: Yeah. we heard,urh, initial reports that you know, Chevron for instance was flying over a huge refining plant out there along the Gulf Coast that some of these big platforms with the big ocean-going liners coming in to offload their oil. They may have been damaged there; they could prevent those supplies coming in. The president is considering releasing some oil stock from the Strategic Petroleum Reserve, but if the refineries can't handle that work, how would that help?

David Wessel: Well, it , it wouldn't help what the Strategic Petroleum Reserve has is raw material that would have to be refined. The problem is this comes at a moment when we don't have a lot of access refining capacity and when oil markets were already on edge because demand for oils from around the world has been so strong. So it is a very delicate moment. I think it actually goes beyond that, because one fifth of all the nation's imports and exports come out of the ports down there in the areas affected by the hurricane. And if it turns out that those ports are damaged, it'll take a while to reopen. The economy effects could go beyond the energy ones.

Contessa Brewer: Ok! That's good to know. I didn't even realize it was such a big import situation.

David Wessel: A lot of , a lot of the nations' grain is exported through those ports, you know, goes down the Mississippi River so...

Contessa Brewer: So you are talking about that perhaps prices could go up for all kinds of goods?

David Wessel: Right or we could sell less of it, absolutely. I mean that's a thing it's so interesting. You know it's obviously devastating for the people who live there and those pictures are so upsetting and you can't imagine what it's like to be there. As a center of production in the US, of the overall US economy, it's not very big. About three percent of the GDP is in this area. That's not very big. But our imports and exports of energy are very important part of that region's economy. And that could have national implications .

Contessa Brewer: Well let's talk a little bit too about the insurance industry because certainly (right) it's already been a long hurricane season. How is Katrina going to affect them when you're talking about early estimates being more than nine billion dollars in insured losses?

David Wessel: Well. Clearly the insurance industry is gonna pay off a lot of money to home owners, and to businesses that have lost property or have had their businesses interrupted. The total losses are being talked about in the range of 25 billion dollars although those estimates are always very squishy so early on. What this means is that the insurance companies and particularly the reinsurance companies those are insurance companies that insure insurance companies are gonna spend a lot of money. There isn't any reason to worry about the financial stability of the system. They have a lot of resources. They've reserved for this. So it's gonna be a big cost, it's gonna hurt their earnings, it's already hurt their stock prices. But I don't think it's gonna have big ripples outside the industry, except for one thing, it always happens like this. They have a big disaster and even though they prepare for disasters and even though they have insurance business,it almost always leads to rating increases across the board for people who buy properties, casualties and liability insurance.

Contessa Brewer: Ok, David thank you so much for joining us with your perspective on that and today you've offered several new angles for us to ponder there. David Wessel with Wall Street Journal.