This wasn’t what we wanted to hear. Everyone was looking forward to the probable post-Labor Day gas price drop. Instead, Katrina seems to be ensuring that prices will remain high, and even go higher.

With about ¼ of the US oil supply coming from Gulf Drilling, imagined shortages are in effect with the platforms shutting down and bracing for possible damage. However, the real problem is the refineries that are dotted along the Gulf coastline. They will be shut down during the hurricane, and if flooding occurs at their locations, it could be weeks before they are operating again.

Oil spiked more than $4 a barrel since Friday, and now sits at about $70.80 in futures trading.

Price gouging will not be the problem here. We need to increase our refinery capacity in the United States as soon as possible to ensure this situation doesn’t present itself again.