Right now there is plenty of crude oil in the world’s pipeline, but a scarcity of gasoline. Katrina knocked a considerable amount of crude-oil production out of commission in the Gulf of Mexico, to be sure. But as a gesture of goodwill, and to make a buck, our allies in the Organization of the Petroleum Exporting Countries, such as Saudi Arabia and Kuwait, agreed to produce more than their usual allotments to keep world reserves stable. At the same time, the U.S. government agreed to release tens of millions of barrels of crude oil from the Strategic Petroleum Reserve, an energy piggy bank started 30 years ago after the Yom Kippur War between Israel and its Arab neighbors disrupted supply.
You can have all the oil in the world and still run short of gasoline, however, if major refineries are out of action. Refineries are large, smelly, unattractive plants that “crack” crude oil’s hydrocarbons into the stuff that makes modern life go, such as heating oil, kerosene, jet fuel, the feedstock for plastics, diesel and automotive gasoline. Few U.S. states have ever wanted these noxious beasts on their coastlines, so the ones built in loosely regulated Louisiana half a century ago make something like half of all the refined crude oil products in the country. When Katrina blasted through, her high winds and storm surge knocked these plants for a loop, and the partial shutdown caused 10% of the nation’s entire supply of gasoline to vanish in a weekend.