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| President George W. Bush |
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| President Bush says his administration is willing to tap oil reserves to recover from Hurricanes Rita and Katrina. (September 26) |
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NEW YORK (CNN/Money) -
President Bush said Monday his administration is willing to tap the nation's strategic oil reserve to deal with supply shortfalls caused by hurricanes Katrina and Rita and urged Americans to practice energy conservation.
"It's important for our people to know that we understand the situation and that we're willing to use the Strategic Petroleum Reserve to mitigate any shortfalls in crude oil that could affect our consumers," Bush said in a statement made at the Energy Department in Washington.
After Hurricane Katrina struck in August, the government agreed to loan 30 million barrels from the emergency stockpile.
Bush said Rita missed a lot of refining capacity along the Texas coast but that the effect of two storms in succession would naturally affect supply. Refineries in the Houston area process about a quarter of U.S. fuel stocks.
The president also announced that he had directed federal agencies to encourage employees to monitor their gasoline consumption through carpooling and limiting non-essential travel. He said he hoped that the American public would follow the federal government's lead when it comes to conservation.
"We can all pitch in by using -- by being better conservers of energy," Bush said. "People just need to recognize that these storms have caused disruption and that if they're able to maybe not drive on a trip that's not essential, that would be helpful."
Oil prices turned higher Monday following Bush's comments after sliding earlier in the session. U.S. light crude for November delivery gained 66 cents to $64.85 a barrel in midday trading on the New York Mercantile Exchange after tumbling more than $2 a barrel Friday and falling in a special electronic trading session Sunday.
Refineries, pipelines hit
Bush said that of 5.4 million barrels a day of refining capacity that had been shut in because of the storms, 1 million were already back up and that another 1.8 million would be back online "relatively quickly."
The extent of damage caused to about 1.7 million bpd of capacity that was located in the path of Rita was not certain, and 900,000 bpd of capacity remains shut in due to Katrina, he said.
Bush said Rita would also affect the ability to get gasoline to markets. Three of four major pipelines supplying gasoline to the Midwest and East Coast were impacted by Rita, but he said they are making efforts to return to full capacity.
In addition to being prepared to tap the Strategic Petroleum Reserve, he said the government has suspended certain EPA rules to make it easier to import gasoline. But he encouraged Americans to "pitch in" and conserve energy and cut non-essential travel.
More supply needed
The impact of the Hurricanes Katrina and Rita highlights the fragile balance between supply and demand in America, Bush told reporters at the briefing.
"I am for increasing supply," he said, adding that more supply would take pressure off prices.
He said this includes expanding refining capacity and building new refineries as well as exploring alternative sources of energy, such as nuclear power.
Two major refineries reported damage from Rita Saturday, but Texas Gov. Rick Perry told CNN late Saturday that the oil industry suffered "a glancing blow at worst."
Rita made landfall early Saturday just east of Sabine Pass, on the Texas-Louisiana state line, battering southwestern Louisiana and the Texas Gulf Coast.
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