Bush considers oil reserves

2005-08-29 18:56

Waco - President George W Bush weighed a decision on whether to release some oil from the nation's petroleum reserves to help refiners hurt by Hurricane Katrina, administration officials said on Monday.

The storm already forced the shutdown of an estimated 1 million barrels of refining capacity along the nation's Gulf Coast.

Adminstration officials, speaking on the condition of anonymity because they were not authorised to speak publicly, said Bush seemed likely to authorise a loan of some oil from the Strategic Petroleum Reserve but that details remained in flux.

In 2004, the president authorised loans from the reserve to help refiners make up for missing supplies when Hurricane Ivan struck.

Meanwhile, Bush got a briefing on the powerful storm from Michael Brown, the director of the Federal Emergency Agency, White House spokesperson Scott McClellan told reporters as Bush headed to Arizona for a speech on Medicare after leaving his Texas ranch.

A department of energy spokesperson said the US government was in touch with oil companies in the region and that a decision on whether to release oil from emergency stockpiles would likely be made in the next 24 to 48 hours.

The government's supply of nearly 700 million barrels of oil is stored in underground salt caverns along the Texas Gulf Coast.

The reserve was established to cushion oil markets during energy disruptions.

The administration was considering what it calls an "exchange" of oil.

After Hurricane Ivan struck the Gulf of Mexico in September 2004, the administration loaned about 5.4 million barrels of crude oil from the reserve to five companies.

It was repaid by April 2005.

Charles Schumer, a New York Democrat, who was pushing the White House to dip into the reserve even before Hurricane Katrina hit to help bring down gas prices, said, "If there was ever a time for the Strategic Petroleum Reserve to be tapped, it would be now."

- AP