Crude economics: cutting off oil bysteria.

• Author: Doherty, Brian
• Position: Citings - Brief article

THE AFTERMATH of Hurricanes Katrina and Rita saw sharply rising oil prices at the pump. These inevitably sparked accusations of gross profiteering on human misery.

But in a recent paper by analysts Robert Bradley and Thomas Tanton, the Institute for Energy Research shows supply and demand adjusting just fine in the aftermath of these disasters. The hurricanes interrupted around 30 percent of America's refining capacity in August and September 2005. The refining industry was already nearly maxed out in late August, working at 97 percent of capacity. By early October, after the storms, that figure was reduced to 70 percent; by the end of the year, it was back to 91 percent. Cries of gouging arose when post-Katrina pump prices increased at a higher rate than did crude prices, but pump prices are also back to...