The New York Times Sept. 5 made it official: the oil shock has arrived. Online at the International Herald Tribune:

When Hurricane Katrina ripped through the oil rigs and refineries along the Gulf Coast last week, it set off the first oil shock of the 21st century.

"This is a lot like 1973," said Daniel Yergin, who wrote a Pulitzer Prize-winning history of oil, "The Prize: The Epic Quest for Oil, Money and Power," and is the chairman of Cambridge Energy Research Associates. "Since Monday, we've had a supply shock on top of a demand shock."

Just as the 1973 crisis led to a global shortage of oil that sent prices soaring and pushed the U.S. economy into recession, today's sudden shortfall of gasoline that is rippling through the economy is likely to slow growth by as much as a full percentage point. And it leaves global energy markets vulnerable, analysts and economists said.

For two years, steadily rising prices barely weighed on global economic growth, in part because of the expanding economies of China and the United States. There was no lack of supply.

Then came Hurricane Katrina. It shut down most offshore platforms and onshore wells in the region, which accounts for over a quarter of U.S. oil production, and idled 10 percent of the country's refining industry.

"We're in uncharted territory," said John Felmy, chief economist at the American Petroleum Institute, the industry's main trade group. "We haven't experienced something like this since the 1980s."

That was after the Islamic revolution in Iran, and during the Iran-Iraq war. Then, as now, drivers, factories, power plants and others were consuming oil as fast as companies could refine crude oil into fuel or other products. Any significant disruption to the supply was quickly magnified in the markets.

One problem today is the supply of crude oil. Years of underinvestment in exploration mean that producers now lack the capacity to bolster production in any significant way to make up for intermittent shortages. But far more important for the current energy crisis, a lack of refining capacity constrains the industry's ability to turn crude oil, even when it is available, into usable products like gasoline or jet fuel.

The U.S. strategic reserve is stocked with enough oil to last about 35 days, and refiners hold a further 25 days' worth of supplies. But with hurricane-hammered refineries out of business for now, the immediate pinch comes in turning oil into gasoline.

"The hurricane created a crisis, but the roots of the problem are much deeper than that," said Robert Mabro, president of the Oxford Institute for Energy Studies. "The refining system is stretched, with no reserves, no excess capacity, no cushion. The fundamental problem is that we depend on oil companies that dislike the refining business because of historically low returns but whose deficit can produce an economic, social and political crisis."

See our last post on Katrina's aftermath, and the oil shock.