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Bush weighs tapping strategic oil reserve

President 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 Monday. A decision was expected later in the day.
/ Source: The Associated Press

President Bush, urging prayer for Gulf Coast communities “hit hard” Monday by Hurricane Katrina, weighed whether to release oil from petroleum reserves to help refiners, administration officials said.

“I want the folks there on our Gulf Coast to know that the federal government is prepared to help you when the storm passes,” Bush said during a Medicare speech at an RV resort here. “In the meantime America will pray, pray for the health and the safety of all our citizens.”

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

Administration officials, speaking on the condition of anonymity because they were not authorized to speak publicly, said Bush seemed likely to authorize a loan of some oil from the Strategic Petroleum Reserve. But details remained in flux and no decision was imminent, they said.

The expected move would be designed to give refineries in the area a temporary supply of crude oil to take the place of interrupted shipments from tankers or offshore oil platforms affected by the storm. It would not be intended to keep a lid on soaring gasoline prices.

White House spokesman Scott McClellan, speaking with reporters aboard Air Force One as the president flew from his Texas ranch to Arizona, said the Energy Department was still assessing the situation before making a recommendation on the reserve.

“Obviously, the Strategic Petroleum Reserve is there for emergency situations, and that would include natural disasters,” McClellan said. “But it’s just too early to know at this point.”

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

Meanwhile, Bush got two briefings Monday on the powerful storm from Michael Brown, director of the Federal Emergency Management Agency, McClellan said.

“Our Gulf Coast is getting hit and hit hard,” Bush said. “I urge the citizens there in the region to continue to listen to the local authorities. Don’t abandon your shelters until you’re given clearance by the local authorities. Take precautions because this is a dangerous storm.”

Among other things, the president verbally made emergency disaster declarations for Louisiana and Mississippi Monday morning. The difference between these declarations and ones over the weekend was that the declarations of Monday allow for the drawdown of federal funds in disaster relief and recovery

A Department of Energy spokesman said the U.S. 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 day or two.

The government’s supply of nearly 700 million barrels of oil is stored in underground salt caverns along the Texas and Louisiana 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.

Sen. Charles Schumer, D-N.Y., 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.”

Also, the Defense Department dispatched emergency coordinators to Alabama, Florida, Louisiana and Mississippi, and they were prepared to provide a wide range of assistance to the states, including communications equipment, search and rescue operations, medical teams and other emergency supplies.

Pentagon spokesman Lawrence Di Rita said the states have adequate National Guard units to handle the hurricane needs, with at least 60 percent of the guard available in each state. He said 65 percent or about 6,500 National Guard troops were available in Louisiana; 60 percent or about 7,000 troops in Mississippi; 77 percent or nearly 10,000 in Alabama, and 74 percent of about 8,200 in Florida.

Di Rita said the Air Force has moved some aircraft.

The First U.S. Army, based at Fort Gillem near Atlanta, has 1,600 National Guard troops that were there training to go to Iraq, and they will be available to assist the states or evacuate Camp Shelby in Mississippi, if necessary.

First Army spokesman Col. Richard Steele said they expect emergency response requests will start coming in from the states after the storm passes. The most likely initial request, he said, would be for satellite phones and other communications equipment.