Katrina, Oil and New Orleans

The NYT reports that the Bush administration has decided to release supplies from the Strategic Petroleum Reserve:

The move, which was expected later in the day, is designed to give refineries a temporary supply of crude oil to take the place of interrupted shipments from tankers or offshore oil platforms affected by the storm.
The U.S. Minerals Management Service said Tuesday that 95 percent of the Gulf of Mexico's oil output was out of service. Oil prices surged back abov e $70 in European markets on Wednesday but slipped quickly to $69.56 after disclosure of the decision involving the release of supplies from the Strategic Petroleum Reserve. Eight refineries were shut down due to Katrina -- half of them producing gasoline.

Gasoline futures jumped 20% yesterday:

For consumers across the nation this means that retail gasoline prices are likely to jump above $3 a gallon - matching inflation-adjusted records reached in the early 1980's - just as millions of drivers hit the roads on the Labor Day weekend.

As for New Orleans itself:

With whitecaps on Canal Street, water coursing through breeched levees and 80 percent of the city under water, surviving, not rebuilding, is now the order of the day. But in the back of their minds people who love New Orleans are wondering what will remain physically and psychologically of perhaps America's most distinctive city when the water recedes and - days, weeks or months from now - some semblance of everyday life struggles to resume.

(Photo: REUTERS/Vincent Laforet/Pool)