Twenty-six countries in an international energy consortium will release more than 60 million barrels of crude oil and gasoline to relieve the energy crunch caused by Hurricane Katrina (search) in the United States.
As part of that effort, the Bush administration will release 30 million barrels of crude oil from U.S. reserves.
Energy Secretary Samuel Bodman (search) called this an initial move, part of what he called an "aggressive" federal response to the hurricane disaster. The fuel being released by the Paris-based International Energy Agency will be in the form of both crude oil and gasoline and will be released over the coming month.
The reserves will amount to about 2 million barrels a day coming into U.S. markets.
Bodman said the oil would be put up for bids from the Strategic Petroleum Reserve (search) next week with the first deliveries in 11 to 14 days. He said he had received indications from other IEA members that a significant part of their portion would be refined products, mostly gasoline, which will be released onto global markets.
"We have made it known that we are facing shortfalls in available supplies of refined products in our country as a consequence of this storm," Bodman said, expressing confidence the gasoline will find its way to the United States where prices are expected to remain high.
Already there are 20 ships carrying gasoline from commercial foreign stocks to the United States, he said. The supplies from government stocks would be in addition.
The Paris-based IEA said in a statement that its member countries "unanimously support" the measures, which will take effect for an initial period of 30 days. The IEA board will meet in two weeks to review the situation, it said.
"They've all agreed and this is something that they're prepared to do to stabilize energy markets worldwide," Bodman said in Washington.
Bodman said the additional supply should help relieve high gasoline prices, but he gave no timeline. He also said the administration's main concern is "to avoid disruptions," rather than short-term price relief.
"We have all been saddened by the tragedy still unfolding in the United States," British Energy Minister Malcolm Wicks said.
"This coordinated response will free up extra supplies to help the market deal more effectively with the disruption caused by Katrina," he said. "This is a global oil market and so a multilateral response is the right way forward."
Georgia and other states are moving to suspend state gasoline taxes, but Treasury Department officials said the possibility of reducing the federal tax on gasoline is not under active consideration in the administration.
Legislation would be required to reduce the federal tax.
Technically, even the release of supplies from the U.S.-based SPR is a matter of joint decision-making by the United States and its European partners. Until now, the administration has loaned oil from the SPR to several refineries, but has not had a general release of crude to counter supply problems. Under international agreements, such a release must be coordinated with other IEA members.
The IEA is an oil market watchdog formed under the auspices of the Organization for Economic Cooperation and Development.
Fears of escalating fuel prices spread across the country this week as damaged Gulf Coast refineries and fuel lines shut down. Gas prices jumped 35 to 50 cents a gallon overnight in many places, pushing the pump costs to well over $3 a gallon in some areas.
On Thursday, President Bush urged Americans to be prudent in their consumption of energy, but called the hurricane a "temporary disruption" to gasoline supplies.
Katrina has disrupted 90 percent of the oil production in the Gulf of Mexico. Nine Gulf Coast refineries have been shut down by electrical problems, flooding and other damage caused by Katrina. Two major pipelines carrying gas to the Midwest and East also have been partially disrupted by the hurricane.
Bodman said some of the shutdown refineries "are showing signs of recovery, some less so." He said some oil companies have been struggling to find their workers in the chaos of the hurricane and its aftermath.