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WASHINGTON - The United States and European nations will tap oil and gasoline stockpiles for 2 million barrels a day, hoping to stem growing gasoline shortages because of disruptions from Hurricane Katrina that have caused fuel prices to soar and some gas stations to run dry.
Meanwhile, two Gulf Coast refineries, shut down by the hurricane, were resuming operation, and another may restart next week, according to the Energy Department. Hurricane damage and loss of electricity shut down nine refineries, two of them with major damage that will take some time to fix. It also halted 90 percent of the Gulf's oil production.
Energy Secretary Samuel Bodman said as part of the emergency release approved Friday by the Paris-based International Energy Agency the United States will release 30 million barrels of crude from its Strategic Petroleum Reserve. Other IEA members will provide another 30 million barrels, mostly in refined gasoline over a 30-day period.
The announcement brought some relief in soaring crude and wholesale gasoline prices.
The cost of crude oil dropped 1.90 cents a barrel to $67.57 and wholesale gasoline declined by 23 cents a gallon to $2.19 on the New York Mercantile Exchange.
Bodman said the Strategic Petroleum Reserve oil will be put up for bid next week with the first deliveries in 11 to 14 days. He said he had received indications from other IEA members that a significant part of their portion would be refined products, mostly gasoline, which will be released and find their way to the U.S. markets.
The decision by the 26-member IEA to make available emergency crude and gasoline stocks came after days of discussions among agency members including the United States. Bodman called the release an "initial" step and indicated more supplies might be made available if needed after the initial 30-day period.
"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. He said that addressing the U.S. crude and gasoline supply problem "will stabilize energy markets worldwide."
The Bush administration repeatedly has rejected use of the Strategic Petroleum Reserve oil to influence prices. But Bodman said the release of 30 million barrels now is in direct response to supply disruptions caused by Katrina and not to interfere in the markets.
The hurricane has halted 90 percent of the oil production in the Gulf of Mexico, according to the Energy Department. Thirty drilling rigs and platforms in the Gulf have been lost and another 28 damaged, said the American Petroleum Institute.
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."
"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."
Meanwhile, some progress was being made to bring some of the refineries impacted by the storm back into operation.
Entergy, the electric utility at the center of the hurricane impact zone, reported it had restored electricity to all but three refineries in the New Orleans area. But three others, with combined production of 562,000 barrels a day, are still without power.
The Energy Department said the Marathon refinery at Garyville, La., and the Chevron Texaco refinery at Pascagoula, Miss., were resuming operation. Exxon Mobil said it would increase gasoline production at its Baton Rouge refinery, where a lack of crude had forced a scaling back of gasoline runs.
The Energy Department on Thursday loaned Exxon Mobil 1.5 million barrels of crude from the government reserve. So far 9.1 million barrels have been loaned to four refineries under an agreement — separate from the IEA release announced Friday — where they have to return crude to the reserve at a future date.
Separately, more gasoline began flowing through three pipelines that carry refined product from the Gulf to the Midwest and East Coast markets. Activity had been halted on the two East Coast pipelines because of electrical outages caused by the hurricane.
The disruptions had caused gasoline to soar well above $3 a gallon in many parts of the country, including price hikes of 50 cents or more overnight in some areas. Some stations closed after running dry.
Bodman said with more crude and refined gasoline being put into the market he expects "some decline in price" although he added "that will be a function of the market place." The Bush administration has steadfastly rejected suggestions of imposing price controls on either crude or gasoline, although some consumer advocates have urged such a move.
