IT IS FINALLY HAPPENING–the much-predicted bursting of the bubble. Surprise: It is the gasoline price bubble that has burst, not the house price bubble. Prices of regular unleaded last week averaged about $2.34 per gallon, below the levels prevailing immediately before Katrina struck, and well below the $3.04 peak reached in early September. Crude prices also headed down from the $70 per barrel level to $57, a six-month low.

That did not stop indignant senators from hauling the CEOs of the major oil companies to public hearings, at which they were excoriated for “price gouging” and for failing to reinvest their record earnings in new production and refining capacity. (No matter that among the principle constraints on such investment are the laws these same legislators have passed, limiting drilling offshore and on federal lands, and turning the process for permitting new refineries into a bureaucratic nightmare.) The industry’s leaders pointed out that it takes twice as long–eight years as compared with four–to get a refinery built in the United States as it does in China and other countries.