Hurricane Katrina is at the very least a significant political event. But is it also an important economic event? “In itself, no,” is the answer. If the storm proves economically important, it will be because of its effect on oil prices. But do high oil prices still matter?

Start with the hurricane itself.The US has, for the moment, lost about 10 per cent of its refining capacity (which is already very short). The reduction in the output of gasoline is 1m barrels a day, which is 10 per cent of US consumption. According to Goldman Sachs, this raised prices of gasoline by 40 per cent over the week. In response, 2m barrels of oil a day will be released from the strategic reserves of the advanced country members of the International Energy Agency over 30 days. Half of this will come from the US strategic reserveA large part of the oil to be released from outside the US is to take the helpful form of refined products.