Refinery Explosion

Last year, when a series of explosions rocked the BP refinery in Texas City, Texas, I suggested that the hasty elimination of terrorism as a possible cause by the FBI was suspicious. A reader familiar with the oil industry e-mailed me to tell how common refinery fires and explosions really are, so I shouldn't be too suspicious.

Nevertheless--that same refinery was hit with a huge explosion yesterday, killing at least 14 and injuring 100. And, just like last year, the spokesmodels are quickly saying they don't know what it was, but they sure know what it wasn't:

Mr. Parus said that the cause was not yet determined but that the explosion occurred in an isomerization unit, which raises the octane level of gasoline. Camille Dass, a BP spokeswoman, said foul play was not suspected.

The explosion caused oil prices to rise a little, but it had a bigger impact on gasoline, which hit a new record high. As my brother pointed out, a damaged refinery actually reduces demand for crude oil while reducing the supply of gasoline and other refined products.