Lest anyone think that the Bush Administration sat idly in the first hours after Hurrican Katrina hit, I thought I'd remind everyone about the assistance offered to the most vulnerable among us, a story that has slipped from the front page due to the subsequent carnage

Nation's Strategic Petroleum Reserve to release some oil
By Sue Kirchhoff, USA TODAY

WASHINGTON — The Bush administration Wednesday said it would release oil from a special federal reserve to help refiners hurt by Hurricane Katrina. The announcement relieved some pressure in oil markets, but gasoline prices kept soaring Thursday, and spot shortages developed.

The decision to let companies request oil from the government's 700-million barrel Strategic Petroleum Reserve came after Katrina knocked out 95% of crude oil production in the gulf. More than a dozen gulf refineries are closed or operating below capacity, and oil rigs, pipelines and ports are down.

EXXON LOAN APPROVED
Exxon Mobil will borrow 6 million barrels of crude oil from the government's emergency stockpile to allay shortages from Hurricane Katrina, the Energy Department said Thursday.

Exxon Mobil will borrow 3 million barrels of sweet crude and 3 million barrels of sour crude from the Strategic Petroleum Reserve, the department said.

Loan requests from other refiners were still being reviewed, the department said, adding it would announce any further loans as they are finalized.

Analysts and Energy Secretary Samuel Bodman said the move would be of limited use. The main problem now is lack of refining capacity to turn crude oil into gasoline.

"It will probably help a little bit, but not materially," said James Rollyson, senior energy analyst at Raymond James & Associates. "Our inventory situation with crude is not in that bad a shape. It's refined products, and particularly gasoline; that's where we really need help."

Rollyson said a separate administration move that temporarily eases environmental rules governing gasoline and diesel fuel would probably do more for supply.

Bodman told the Associated Press that the reserve could deliver 5 million barrels of oil per day, more than three times the amount of lost gulf production.

ENERGY MARKETS TODAY
Gasoline supplies tightened Thursday in markets that depend on shipments from Gulf Coast refiners and pipelines, and motorists increasingly faced pump prices well in excess of $3 a gallon.

Gasoline futures surged for the fourth day in a row on the New York Mercantile Exchange, sending prices 25% higher in less than a week. Unleaded gasoline for October delivery traded at $2.42 per gallon, an increase of more than 16 cents.

Oil held strong near $69 a barrel as crude oil contracts for October delivery rose 51 cents to $69.45 a barrel.

Complete markets report

The stockpile, stored underground in Texas and Louisiana, was last used after 2004's Hurricane Ivan. Companies that borrow from the reserve must pay it back, at a slight premium.

Bodman said he had approved the first request for oil from the reserve, but didn't know how much would eventually be borrowed. He did not disclose the names of firms requesting oil.

"Will it make a major difference in the price of gasoline? Based on the numbers that I see, probably not," Bodman told AP. "It'll help some, but we have significant refining capacity that is dysfunctional."

Red Cavaney, president of the American Petroleum Institute, told a news conference that opening the reserve was only a partial solution, but would provide stability to refiners that are operational: "You have to keep feed-stock going to them if you're going to have any hope of keeping them up and running."

Some members of Congress, including Sen. Charles Schumer, D-N.Y., had wanted a more aggressive release. Lawmakers plan energy hearings. Cavaney urged better conservation.

But analysts doubt much could be done in the short term. "You can't put (crude) in your car and go," said Sean Sexton, energy analyst with Fitch Ratings. "Don't drive, that's all your choice is."