What has happened to our ‘cheap’ gasoline?

Less than two years after Katrina, consumption hasn’t changed

MIDLAND, Texas (MarketWatch) — After hurricane Katrina, a shortage of supply caused gasoline prices to rise rapidly, (just as a surplus in supply would have caused the price to fall. This always happens in a free economy.) Indications are that with the run up in gasoline prices, conservation kicked in, and we used less gas.

Katrina had caused 12% of the U.S. refining capacity to be shut down. Then came Rita, and we saw another 22% of the refinery capacity shut down temporarily. But other than spot shortages along the evacuation routes for Rita, we did not see any gasoline shortages in the U.S.


Gasoline inventories rose for weeks ending Sept. 5, 2005 and Sept. 12 2005. Then, for week ending Sept. 19, 2005, gasoline inventories rose an amazing 3.4 million barrels. In fact, demand had declined to a point where we actually encountered no widespread shortages of gas anywhere in the U.S., in spite of the loss of about 1.5 million barrels per day in refining capacity.

So let’s face reality: the only way the American people will conserve gasoline is if the price is high enough to cause them to cut out unnecessary trips, to acquire more fuel efficient vehicles, to form car pools, and to use mass transportation.

MarketWatch