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Thursday, September 11, 2008

Katrina V. Gustav

The contrast could not be clearer:  

With Gustav, people were prepared.  Suppliers and demanders both expected future prices to rise and gas was consumed just prior to the hurricane by people evacuating, and massive preparedness forces entering the city.   Prices soon fell back to normal as the storm passed, doing little damage to the city.  

With Katrina, US (and Indiana) prices surged as expectations about future prices rose, and as ACTUAL production in the gulf was cut to almost nill (temporarily).  Meanwhile, prices were relatively unchanged as New Orleans demand fell (people that survived didn't feel like swimming to the pumps) and supply of course fell.   Prices were nonetheless volatile.   Only after people were let back into the city did prices start rising in New Orleans (over a month after landfall).  

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