Bush Could Tap Heating Oil Reserve

WASHINGTON – President Bush is ready "to do whatever it takes" including, if necessary, tapping government stocks of heating oil to counter supply shortages this winter, his energy secretary said Monday.

Samuel Bodman (search) said the twin hurricanes Katrina and Rita have dealt "a very significant blow" to the country's energy infrastructure" with almost all of the Gulf Coast's oil production, nearly 80 percent of the region's natural gas supplies, and a fifth of the country's refining capacity still shut down.

Bodman said that a decision to release additional government stocks of crude oil, or for the first time tap the government's Northeast heating oil reserve, will be considered by Bush.

"We are prepared to do what is necessary with regards to the strategic reserves," Bodman said, adding that the president has indicated "he is prepared to do whatever it takes" to meet supply needs.

"We've had a very severe pair of episodes, they have damaged the (energy) infrastructure," Bodman said at a news conference held with the Alliance to Save Energy, a private energy conservation group. Bodman said the country can be expected to face high heating oil and natural gas prices this winter.

But he added, with conservation "we can be successful in minimizing the pain caused by high energy prices this winter."

Congress five years ago created a 2-million-barrel Northeast heating oil reserve that is to be used in case of supply shortages or delivery problems in nine states from Maine to Pennsylvania. Fuel oil is widely used in the Northeast to heat homes and businesses.

The government stockpile of heating fuel, which is rotated regularly while held at private terminals in New York Harbor and Connecticut, has never been used.

The Energy Department has forecast sharp increases in heating costs this winter because of the disruption of natural gas supplies and refining capacity in the aftermath of Hurricanes Katrina and Rita.

In response to Katrina, the Energy Department sold 11 million barrels of crude from its Strategic Petroleum Reserve — which holds crude oil but no refined products — and loaned another 13 million barrels to specific refineries. The department has not ruled out providing additional crude, but so far has had no requests.

The department, meanwhile, distributed a pamphlet Monday on tips to save energy, including installing more insulation in homes and lowering the thermostat a few degrees. It also plans along with the Alliance an advertising campaign promoting energy conservation.

Last week, Bush urged people to drive less because of high gasoline costs, which in many parts of the country again have exceeded $3 a gallon after receding somewhat after Hurricane Katrina.

Asked if the administration's approach to dealing with high energy costs is similar to when President Carter in the 1970s went on television, wearing a sweater and urging energy conservation, Bodman sidestepped the question.

"The situation we are facing is a very different one than we faced in the past...in the Carter administration," said Bodman. "This is in response to significant damage that has been done to the country's energy infrastructure."

The country faced soaring energy prices in the late 1970s because of a disruption of oil shipments as a result of the Iran hostage crisis.