Crude oil prices struck a record high of $70.85 in New York trading on August 30. If you believed all the hype surrounding the aftermath of Hurricane Katrina – e.g., it was Bush’s fault and the economy will be in ruins – well, you may just have been a victim of the TV talking heads’ hysteria, and that of the New York Times, LA Times, etc., etc.

A few days after Katrina ravaged the Gulf Coast, the news networks kept showing the “startling” image of a gas station sign advertising $5.87/gallon – I believe it was in Atlanta. Of course, this was a price-gauging aberration being peddled for its shock value. A headline on CNN Money this morning reads, “Gas prices continue to fall - AAA report: Price of regular unleaded gets closer to $3-gallon; higher octane fuels follow:”

The nationwide average price for a gallon of regular unleaded gasoline on Friday fell to $3.018, a little more than one cent less than Thursday's price of $3.03, the travel club reported.

The price has dropped nearly 4 cents a gallon since reaching a record of $3.057 on Monday, according to AAA, formerly the American Automobile Association.

So why are gas prices receding, despite the fact that the world is coming to an end? Again, CNN Money:

Despite the larger-than-usual drop caused by Hurricane Katrina, crude supplies remain well above the upper end of the average range for this time of year, the EIA [Energy Information Administration] said.

The EIA issued a report yesterday on current oil inventories:

Gasoline futures also tumbled immediately after the 10:30 a.m. ET report, falling as low as $1.96 a gallon on the NYMEX, but they turned around to end the trading session 2 cents higher at $2.04 a gallon.

Crude stocks fell by 6.4 million barrels, gasoline stocks fell by 4.3 million barrels and stocks of distillates decreased by 800,000 barrels, according to the Energy Information Administration.

Analysts were looking for a drop of 6.4 million barrels of crude, 6.2 million barrels of gasoline and 2.6 million barrels of distillates, according to Reuters.

So much for the “analysts.” As to the conversion of crude oil into gasoline by refineries, and to the delivery of gas through pipelines, which of course was prognosticated to never return:

The energy industry's desperate push to recover from Hurricane Katrina began to pay dividends Tuesday, as nearly half of the refineries fully or partially closed by the storm returned to service. …

One key to recovery efforts has been the return of closed crude and petroleum product pipelines, which previously created supply bottlenecks. Two of the most important, the Colonial and the Plantation, are now back at 100 percent capacity.

Natural gas pipeline operators also said that shipments continued to increase, adding that initial inspections uncovered few instances of substantial damage.

Hurricane Katrina was a terrible tragedy for Americans, no doubt. But running around screaming, pointing fingers, and distorting the facts is just throwing gasoline on the fire, if you will excuse the oil pun/inference. The Katrina scare holds about as much water as Bob Woodward’s charge that President Bush and the Saudis had a secret “deal” to keep oil prices low in the run-up to the 2004 presidential election, if you will excuse the flood pun/inference.