White House to Tap Strategic Oil Reserve
RENEE MONTAGNE, host:
The White House has approved the release of oil from the nation's Strategic Petroleum Reserve. The move is designed to offset the large production cuts caused by Hurricane Katrina. The storm has idled most of the big refineries in the region and also appears to have damaged some of the oil and gas rigs in the Gulf of Mexico. NPR's Jim Zarroli joins me now.
What is the White House saying this morning about what it plans to do?
JIM ZARROLI reporting:
Well, this has been widely expected. Energy Secretary Sam Bodman spoke on TV this morning. He said the White House has approved the release, he said--this will be announced later today--and oil could be available for shipment to the nation's refineries as early as tomorrow. The reserve is--the government has about 700 million barrels of oil stored in salt caverns along the Louisiana and Texas coasts, and the president has agreed to loan oil from the reserve before--after Hurricane Ivan last year. This time the damage is a lot worse.
MONTAGNE: And--but given that big refineries have been damaged, how much of a difference will this make in addressing some of the problems caused by Hurricane Katrina?
ZARROLI: Well, that's a good question. The damage to oil platforms is--right now there are two problems. One is the damage to oil production facilities, the platforms. That's still pretty much being assessed. But there's also this bigger problem of the refineries. Some 90 percent of them are down right now, mostly because of power outages, and as a result of that, some big oil companies yesterday were saying that they couldn't provide enough gasoline to their customers, and as a result of that, the price of unleaded gasoline has really begun to rise. That problem is not going to be addressed by the release of oil from the reserve.
MONTAGNE: And what kind of effect will this have on oil prices?
ZARROLI: It may have a psychological effect, and that's very important, because psychology is really what the oil markets operate on. If people feel that the White House is out there addressing this problem, it might make the public feel a little bit better. That could certainly have an impact on prices. We saw that a bit this morning. Prices came down already after this was announced. But again, if you--and no matter how much oil you have, if you can't refine it, it's still gonna be a big problem.
MONTAGNE: And then, Jim, what are the latest assessments of the damage that Katrina did to production facilities in the Gulf?
ZARROLI: There have been some reports coming in. Royal Dutch/Shell said yesterday that there was damage to the upper deck of its large Mars platform. Two of the drilling rigs are adrift. Some other companies like BP said they've seen less damage. Some of the refineries, as I said, are now offline. That is a bigger problem. One of the most important pipelines, the Colonial Pipeline, which runs from Houston to New York, is down because of widespread damage to the electric grid. On the other hand, the Louisiana offshore oil platform, where a lot of the nation's imported oil comes through, is said to have suffered minimal damage, which is good news.
MONTAGNE: Jim, thanks very much. NPR's Jim Zarroli, thank you.
ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.