WASHINGTON – Twenty-six countries in an international energy consortium
will release more than 60 million barrels of crude oil and gasoline to
relieve the energy crunch caused by Hurricane Katrina in the United
States.
As part of that effort, the Bush administration will release 30 million
barrels of crude oil from U.S. reserves.
Energy Secretary Samuel Bodman called this an initial move, part of what
he called an "aggressive" federal response to the hurricane disaster.
The fuel being released by the Paris-based International Energy Agency
will be in the form of both crude oil and gasoline and will be released
over the coming month.
The reserves will amount to about 2 million barrels a day coming into
U.S. markets.
"We have made it known that we are facing shortfalls in available
supplies of refined products in our country as a consequence of this
storm," Bodman said at a news conference.
The Paris-based IEA said in a statement that its member countries
"unanimously support" the measures, which will take effect for an
initial period of 30 days. The IEA board will meet in two weeks to
review the situation, it said.
"They've all agreed and this is something that they're prepared to do to
stabilize energy markets worldwide," Bodman said in Washington.
Bodman said the additional supply should help relieve high gasoline
prices, but he gave no timeline. He also said the administration's main
concern is "to avoid disruptions," rather than short-term price relief.
"We have all been saddened by the tragedy still unfolding in the United
States," British Energy Minister Malcolm Wicks said.
"This coordinated response will free up extra supplies to help the
market deal more effectively with the disruption caused by Katrina," he
said. "This is a global oil market and so a multilateral response is the
right way forward."
Georgia and other states are moving to suspend state gasoline taxes, but
Treasury Department officials said the possibility of reducing the
federal tax on gasoline is not under active consideration in the
administration.
Legislation would be required to reduce the federal tax.
Technically, even the release of supplies from the U.S.-based SPR is a
matter of joint decision-making by the United States and its European
partners. Until now, the administration has loaned oil from the SPR to
several refineries, but has not had a general release of crude to
counter supply problems. Under international agreements, such a release
must be coordinated with other IEA members.
The IEA is an oil market watchdog formed under the auspices of the
Organization for Economic Cooperation and Development.
Fears of escalating fuel prices spread across the country this week as
damaged Gulf Coast refineries and fuel lines shut down. Gas prices
jumped 35 to 50 cents a gallon overnight in many places, pushing the
pump costs to well over $3 a gallon in some areas.
On Thursday, President Bush urged Americans to be prudent in their
consumption of energy, but called the hurricane a "temporary disruption"
to gasoline supplies.
Katrina has disrupted 90 percent of the oil production in the Gulf of
Mexico. Nine Gulf Coast refineries have been shut down by electrical
problems, flooding and other damage caused by Katrina. Two major
pipelines carrying gas to the Midwest and East also have been partially
disrupted by the Hurricane.
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