Bush Releases Oil from
Petroleum Stockpile, Urges Nation To Brace for Higher Prices,
Shortages
September 01, 2005 — By Tom Raum, Associated Press
WASHINGTON — President Bush raised
the possibility Wednesday that Hurricane Katrina will lead to even
higher gasoline prices and shortages in some areas, even as his
administration moved to release oil from an emergency government
stockpile and to temporarily ease pollution standards on gasoline and
diesel fuel.
"Our citizens must understand the storm has disrupted the capacity to
make gasoline and distribute gasoline," Bush said in a Rose Garden
speech after meeting with top officials to discuss the crisis.
"A lot of crude production has been shut down because of the storm,"
Bush said after returning from his Texas ranch to oversee federal relief
efforts. He flew over some of the affected area on his way.
The decision to tap the Strategic Petroleum Reserve was an effort to
keep production of gasoline and other fuels steady.
Even so, gasoline prices leaped nationwide as the extent of damage to
the nation's oil-distribution network became more apparent. Key
refineries and pipelines remained out of service, reducing fuel
shipments to retailers.
Tapping the government reserves will "certainly help those companies and
those refineries to function, whereas they wouldn't be functioning
without a supply of crude oil," Energy Secretary Samuel W. Bodman told
The Associated Press in an interview.
Moments afer Bush's speech, Sen. Charles Schumer, D-N.Y., said the
president's actions do not go far enough. "On energy, Americans were
expecting a lot more from the President. He took a tiny baby step when a
giant step is required," said Schumer, who contends Bush needs to
release enough oil from the reserve to flood markets and drive down
prices.
Rising gasoline prices have taken a political toll on Bush, helping to
drive down his approval ratings to an all-time low.
The oil reserves -- about 700 million barrels of crude oil stored in
underground salt caverns in Texas and Louisiana -- were last tapped in
September-October 2004 during disruptions caused by Hurricane Ivan.
In the aftermath of Hurrican Katrina, some 95 percent of the Gulf of
Mexico's oil output was out of service, according to the U.S. Minerals
Management Service. Nearly 5 million barrels of production have been
lost since Friday because of the powerful storm and the shutdown of
eight refineries.
"It is clear the consequences of the hurricane have become more
widespread," Stephen Johnson, the Environmental Protection Agency's
administrator, told a news conference.
A day after the EPA announced it would temporarily allow the sale of
higher-polluting gasoline in Alabama, Florida, Louisiana and
Mississippi, it acted to ease certain restrictions on gasoline blends
and diesel fuel in the rest of the country as well.
"This will help take some pressure off the gas price," Bush said as
gasoline prices soared toward $3 a gallon in many parts of the country,
surpassing that level in some places.
Bodman said freeing oil from the petroleum reserve would do little
toward easing gasoline prices.
"Will it make a major difference in the price of gasoline? Based on the
numbers that I see, probably not," Bodman told the AP. "It'll help some,
but we have significant refining capacity that is dysfunctional, either
because they don't have electric energy or because they're flooded, or
both."
Some lawmakers have urged Bush to tap the reserve more aggressively in
hopes of forcing prices down.
But the president's action is limited to just giving refineries a
temporary supply of crude oil to take the place of interrupted shipments
from tankers or offshore oil platforms affected by the storm -- and it
requires the oil companies to replace the borrowed crude oil at a later
time.
Bodman told a news conference he had approved the first in a series of
requests from companies requesting oil from the reserve. But the company
later rescinded its request after finding a private source for the oil,
Energy Department officials said.
He said it was too early to tell how much oil would be released.
"We've also begun working with other agencies on planning, even before
the storm came ashore, and have been in close contact with the state and
local authorities assessing the overall impact of this storm on our
nation's power infrastructure," Bodman said.
The administration's narrowly targeted step drew criticism from those
advocating large releases from the reserve to try to drive down prices.
"The president is willing to do what it takes to relieve an oil company,
but not enough to relieve the crushing burden of oil speculation and
price-fixing on American consumers and small businesses," said Rep.
Edward J. Markey of Massachusetts, a senior Democrat on the House Energy
Committee.
Rep. Joe Barton, R-Texas, chairman of that committee, announced a
congressional hearing Tuesday on Katrina's impact on energy markets. "I
hope this is the silver lining that lets us really look at building new
refineries and new pipelines and diversify the location so we are not as
dependent on the area that the hurricane hit," Barton said.
Bodman ruled out action to impose a national ceiling on the price of
gasoline.
"I don't think you'd find a lot of support for that," the energy
secretary told CNN.
The production and distribution of oil and gas remained severely
disrupted by the shutdown of a key oil import terminal off the coast of
Louisiana and by the Gulf region's widespread loss of electricity, which
is needed to power pipelines and refineries.
Bush, who returned from his Texas vacation to chair a meeting of a White
House task force set up to coordinate federal efforts, had Air Force One
fly over New Orleans and other affected areas on the way to Washington.
While on the plane, Bush took a call from King Abdullah of Saudi Arabia.
"The king offered Saudi Arabia's support," said White House spokesman
Scott McClellan. The world's biggest crude oil producer, Saudi Arabia
has pledged to boost output by 1.5 million barrels a day -- to 11
million -- to replace shortfalls.
Meanwhile, European nations began considering the release of their own
government-controlled stockpiles of gasoline and heating oil to help
stabilize markets, said officials at the Paris-based International
Energy Agency.
Source: Associated Press |