U.S. to Release Oil From Reserve to Aid Refiners Hit by Hurricane
The move is designed to give refiners a temporary supply of crude oil to take the place of interrupted shipments from tankers or offshore oil platforms damaged by the storm.
Eight refineries were shut down due to Katrina — half of them producing gasoline, according to the Associated Press.
The U.S. Minerals Management Service said Tuesday that 95 percent of the Gulf of Mexico’s oil output was out of service.
Oil prices, which had surged to $70 per barrel in European markets on Wednesday, slipped to $69.56 after the disclosure of the decision to release some of the Strategic Petroleum Reserve.
The government’s emergency stockpile — nearly 700 million barrels of oil stored in underground salt caverns along the Texas and Louisiana Gulf Coast — was built to cushion oil markets during energy crises.
On Monday, Citgo Petroleum, a subsidiary of Venezuelan state oil company PDVSA, said it requested 250,000 to 500,000 barrels of crude from the stockpile for its refinery in Lake Charles, La, according to Reuters.
To avoid a supply crunch, the Environmental Protection Agency announced it would temporarily allow the sale of higher-polluting gasoline in Alabama, Florida, Louisiana and Mississippi, because those states can’t provide enough fuel to consumers that meets Clean Air Act requirements, reported the AP.
The agency also said those states will be allowed to use motor vehicle diesel fuel with a sulfur content higher than the 500 parts per million standard for the next two weeks through ozone season.
President Bush, meanwhile, cut short his vacation in Texas to return to Washington on Wednesday to oversee the federal response to the damage left in Katrina’s wake. He planned to chair a meeting of a White House task force set up to coordinate federal aid efforts.
The president also was expected to visit the worst-hit regions by week’s end.