It took a category five hurricane that damaged all oil refineries in the Gulf of Mexico, but President Bush has finally agreed to release some of the nation's strategic oil reserves.
According to the U.S. Minerals Management Service, 95 percent of all of the Gulf of Mexico's oil output has been at least temporarily disrupted in the aftermath of Hurricane Katrina.
Prior to the announcement made by Energy Secretary Samuel W. Bodman on Wednesday morning, oil prices had climbed past $70 per barrel on European markets. The announcement that the U.S. will release some of the strategic reserves sent prices back down to $69.56.
The government's emergency petroleum reserves consist of nearly 700 million barrels of oil stored in underground salt caverns along the Texas and Louisiana Gulf Coast. It was established to cushion oil markets during energy disruptions or other emergencies.
Many had been calling on President Bush to release some oil from the reserves as prices continued to hit record highs (and oil company profits did likewise). Until today, the president resisted the calls.
In an interview on CNBC, Bodman explained, 'In a word. It is going to be done,' Bodman said. 'Last evening it was approved and I think you'll be seeing an announcement about it later in the day. So we are doing everything we can to be responsive.'
One of the five storage houses of the reserves is out of order due to Katrina. It is located in New Orleans, a city that is in the process of being evacuated.
'Our job is to get the infrastructure going again,' Bodman said. 'To the extent that we have delays in getting these pipelines functioning, then were are going to have the potential for gasoline shortages.' Bodman said the federal government will 'do everything we can do to get fuel available to the rest of the country.'
Later, Bodman appeared on Fox News Channel and was asked if any price gouging was going on. He did not directly answer the question but responded, 'I would like to believe that in this time of crisis that all of us are going to pull together to try to deal with this very difficult circumstance and situation that's confronting not just this region, but this country. We're hopeful of that, but if we have some bad actors, we have a mechanism to deal with it.'
