the set - up of the european monetary union. it is remarkable for its asymmetry : whereas monetary policy has been communitised at the european level, fiscal policy has remained a matter of national responsibility. this is by no means a bad thing in itself, as it does have lots of merits. in particular, it grants member states sufficient leeway to preserve their diversity, that is, to establish their own business models or to tailor economic and social institutions and policies to their own national preferences. but to make sure that such an asymmetrical set - up of a centralised, single monetary policy and decentralised fiscal policies works well, fiscal discipline is absolutely essential. past experiences have shown that monetary unions are rather like any normal family – if there is a quarrel, then it will be about money. this becomes particularly relevant as the set - up of the european monetary union can further compound the tendency of governments to finance their spending through debt because the consequence of bad policy choices can more easily be externalised to neighbouring countries. in addition, if market participants tend to see the monetary union as a system of mutual financial assistance in the event of serious trouble, doubts about a country ’ s solvency could spread more quickly to the other member states. this is why common fiscal rules are an integral part of the treaty establishing the monetary union. ecb president mario draghi once aptly summed up the rationale behind these rules as follows : “ the consequences of misguided fiscal policies in a monetary union are too severe to remain self - policed. ” the importance of sound fiscal policies from the perspective of a central banker also stems from the ability of monetary policy to accommodate high levels of public debt. this, however, bis central bankers ’ speeches could threaten price stability in the longer run. thus, the higher public debt becomes, the greater the pressure that might be applied to monetary policy to respond accordingly. this once prompted mervyn king, the former governor of the bank of england, to quip that : “ central banks are often accused of being obsessed with inflation. this is untrue. if they are obsessed with anything, it is with fiscal policy. ” this “ obsession ” holds even truer for a stability - oriented central bank within a monetary union. against this backdrop and in order to keep monetary union on track despite these dangers, the founders of the european monetary union drew up the fiscal rules enshrined in both the maastricht criteria and

gas production in the gulf are operating at less than 50 percent of pre - katrina levels. since the first evacuations of oil and gas facilities were ordered before katrina, cumulative shortfalls represented almost 4 percent of the nation's annual production of crude oil and 2 percent of our output of natural gas. the combination of flooding, wind damage, and a lack of electric power also forced many crude oil refineries and natural gas processing plants to shut down. the restoration of production at the affected natural gas processing facilities has proceeded particularly slowly, in part because of the lack of natural gas feedstocks and infrastructure problems. most refineries, however, will be back on line within the next month or so, though a few may take longer. in the interim, a greater output of refined petroleum products in other areas of the country and much higher imports, especially of gasoline, are making up for the production shortfalls in gulf refining. the temporary lifting of some environmental regulations and the suspension of the jones act facilitated those adjustments. in addition, refiners have shifted the mix of production toward more gasoline and less heating oil and jet fuel. that shift has had benefits in the short run, though the longer it continues, the greater the possibility of upward pressure on distillate fuel oil prices during the winter heating season. releases from the nation's strategic petroleum reserve relieved much of the upward pressure on crude oil prices, and imports of refined products responded rapidly to ease the price pressures stemming from the loss of refinery production in the gulf. as a consequence, the nationwide retail price of gasoline for all grades has declined 60 cents per gallon from its peak of $ 3. 12 per gallon in the week of september 5. motorists appear to have economized on their driving, and gasoline demand appears to be off a bit. however, it will take time and an appreciable increase in the fuel economy of our stock of motor vehicles to fundamentally change the amount of motor fuel used on our nation's highways. 1 / 3 the far more severe reaction of natural gas prices to the production setbacks that have occurred in the gulf highlights again the need to expand our nation's ability to import natural gas. in contrast to the fall in crude oil prices and the sharp narrowing of refinery margins during the past two months, natural gas prices have remained high. moreover, judging from elevated distant futures prices, traders expect natural gas prices to edge lower but to stay high for the foreseeable