SAVE   |   EMAIL   |   PRINT   |   RSS  
Bodman: more oil coming to market
DoE chief says global agency will provide 60 million barrels of oil and gas to help with shortages.
September 2, 2005: 5:39 PM EDT
By David Ellis, CNN/Money staff writer
The International Energy Agency approved tapping emergency reserves Friday for the first time since January 1991.
The International Energy Agency approved tapping emergency reserves Friday for the first time since January 1991.
Gas crisis looms
Experts fear near-term hit on economy from hurricane Katrina; say longer-term fallout less dire. (Full story)
Gas wars rage on
Five tips
What you need to know about insurance after a disaster. (Full story)
Video More video
CNN's Andy Serwer takes a closer look at price gouging and refinery shortages. (September 2)
Play video

NEW YORK (CNN/Money) - Energy Secretary Samuel Bodman said Friday that an international oil agency will make 60 million barrels of oil and gasoline available to the marketplace.

Speaking from Washington, Bodman announced that the International Energy Agency (IEA) will release crude oil, gasoline and other refined products over the next month at the rate of 2 million barrels a day.

"The U.S. welcomes this historic and unanimous decision by member countries of IEA," Bodman said. "I believe it is an appropriate response to the disruption that is occurring as a result of the hurricane."

The last time the IEA tapped emergency reserve was in January 1991 when U.S. military forces attacked Iraqi forces in Kuwait.

Fadel Gheit, an oil analyst for Oppenheimer & Co., said the move by the IEA was done out of precaution, especially with pipelines and refineries working to become operational again.

"It's a precaution because the problem is the infrastructure," he said. "It's not reliable and you don't want another panic situation."

The Bush administration will also offer 30 million barrels of oil for sale from the U.S. Strategic Petroleum Reserve (SPR), the country's emergency stockpile, Bodman said.

Up until Friday's approval by the IEA, the Department of Energy had approved loans totaling 9.1 million barrels to refiners ExxonMobil (Research), Placid Refining, Valero Energy (Research) and Total S.A. (Research) .

Late Friday afternoon, the Department of Energy had approved two additional loans from the SPR -- 2 million barrels to British Petroleum (BP) and 1.5 million barrels to Marathon Oil (Research).

As part of the agreement, oil companies are expected to return the oil to the emergency stockpile once supply conditions have returned to normal.

Bodman's announcement comes as the federal government steps up its response to Hurricane Katrina, which slammed into Louisiana, Mississippi and Alabama Monday, killings hundreds of people and making millions homeless.

The storm also disrupted the flow of oil and gas from the Gulf Coast to other parts of the U.S. and has sent gasoline prices above $3 a gallon in many regions of the country.

Bodman said the IEA, an intergovernmental agency that advises 26 governments, including the U.S., on energy policies, will meet again on Sept. 15 to review how energy markets have reacted to the new supply of oil.

With gasoline prices soaring, the energy secretary noted that the IEA shipments will include more than 1 million barrels of gasoline a day, though he could not give a precise quantity.

In an effort to alleviate pressures at the pump, the Environmental Protection Agency relaxed gasoline distribution rules while the Department of Homeland Security waived the Jones Act which will promote more efficient delivery of gasoline.

The bidding for the new oil from the U.S. strategic stockpile is set to begin on Tuesday.

The SPR, which was created following the 1973-74 oil embargo, currently holds 700.6 million barrels of crude oil, according to the Department of Energy.


What is the outlook for prices at the pump? Click here.

How much is Katrina going to cost the U.S. economy? Click here.

Worried about being gouged at the pump? Click here.  Top of page

Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?