Why are there no black people in grease?

Answer 1

One reason could be that during the time period that Grease was meant to take place (1959) segregation was still a nation-wide policy and their were few desegregated schools in The US of A. Although slavery had long since been abolished and California had formally ended legal racial segregation more than ten years earlier, school districting along racial and socio-economic lines was still common.

The same socio-economic discrimination contributed to poverty among many minority ethnic groups who might have lived in the surrounding neighbourhood and attended a middle class high school like Rydell.

Having said this it is more likely that they just didn't want to address any of the issues surrounding a multi-racial high-school in the late 50's as, given the time-line and location, is is not unlikely that there would have been a few black students; not to mention quite a few more Hispanics and asians (Japanese/Hawaiin descent).