Katrina Disrupts Energy Supplies

Hurricane Katrina disrupted oil supplies so President Bush today opened America's strategic reserve to lend some of that oil to refiners. With that, the price of crude fell today.

But the problem is the hurricane has also disrupted operations at the refineries that turn the oil into gasoline. So prices on the gasoline futures markets soared.

CBS News Correspondent Anthony Mason reports from Milwaukee that the price at the pump has jumped 30 cents in many cities.

Katrina came to Milwaukee Wednesday, where they woke up to $3 a gallon gas.

"Who can afford that?!" complained one resident.

Overnight the price at some pumps in this city and others had jumped 30 cents.

"This is just too fast. I mean for the price to go up that quick. And I mean that much - that's a lot of money," said one man.

But they were desperate for fuel in Louisiana where the lines were long and things got testy. One woman told Mason that she had waited in line two hours for gas.

Katrina has dealt a disruptive blow to the nation's energy supplies.

"If you add up all the energy that flows through the region, it accounts for about a third of the nation's supply," said Mark Zandi of Economy.com.

A drilling rig washed ashore on Dauphin Island off Mobile, Alabama — blown more than 65 miles from its drilling site. Its owners said it could take a year to repair.

Overnight the government opened the strategic petroleum reserve, offering to loan oil to refineries.

Along the Gulf Coast's strip of refineries — from the Texas-Louisiana border all the way to Mobile, Alabama — at least eight major refineries remained shut down.

"If you've got a loss in refining capacity even if you released oil from the Petroleum Reserve, the fear is that it doesn't have any place to go," said energy analyst John Kingston.

Whatever the damage, the oil companies have plenty of incentive to recover.

"And you know at these kind of prices, there's lots of money to be made," Zandi said. "So I'm sure they're gonna work triple overtime to get their facilities up and running again."

But we could be living with $3 a gallon gas for awhile. Trying to predict when prices will ease is like trying to guess when people in Louisiana can go home again.