WASHINGTON – The White House has signaled it is willing to tap the nation's crude oil stockpile if needed to help refiners whose supplies were disrupted by Hurricane Katrina (search). But the action won't have much effect on soaring gasoline prices. As fuel costs keep rising, President Bush could find himself under increasing pressure from both parties to do more.
As the shutdown of oil platforms, refineries and pipelines drove energy prices to new highs, Bush decided to end his summer vacation on his Texas ranch and return to Washington on Wednesday to monitor hurricane recovery efforts.
Even before the powerful storm ripped through the oil-rich Gulf of Mexico (search), White House advisers were blaming Bush's slide in the polls at least in part on high gas prices. And lawmakers home for their August break have been getting an earful of complaints about pump prices.
But the political reality — for Bush and for the lawmakers — is that there are few realistic options for easing prices in the short term. The storm damage joins other factors that are relentlessly pushing up prices, including continuing war in Iraq (search), tensions with Venezuela and rising demand in China.
"In the next few months, there's no upside," said economist Mark Zandi of Economy.com, an economic consulting service. "And this winter, we're going to feel it more noticeably as people pay record gas prices and record home-heating bills."
If repairs on oil production sites take longer than expected, it could generate severe oil, gasoline and natural gas shortages, threatening the U.S. economy.
The crisis draws attention to the Strategic Petroleum Reserve, the nation's emergency supply of 700 million barrels of crude oil buried in salt caverns in Texas and Louisiana.
Bush is expected to authorize the release of just enough oil from the reserve to help make up for production losses directly related to the powerful storm — with a stipulation that the oil later be replaced by oil companies with an even larger quantity.
With gasoline prices nearing or surpassing $3 a gallon in many areas, some lawmakers want the president to go further and open the stockpile's spigots to help drive down prices.
The administration contends that would defeat the purpose of the reserve, which is to protect the nation against supply disruptions like the Arab oil embargoes of the 1970s.
Sen. Charles Schumer, D-N.Y., a leading advocate of aggressively tapping the reserve, disagrees.
"We have more oil in the Strategic Petroleum Reserve than we've ever had. It's full. And using about 30 or 40 million barrels for a few months to get the prices down will not hurt us strategically," Schumer said in an interview, adding, "I think pressure will build" on Bush.
Joining Schumer in a letter to Bush urging action was Republican Sen. Olympia J. Snowe of Maine. "Now is the time to utilize our strategic reserves to soften the blow" of rising prices, she said.
Texas Republican Rep. Joe Barton, chairman of the House Energy Committee, also has urged Bush to release oil from the reserve to help protect the economy.
Bush has long insisted that the reserve be used just for emergencies and not as a way of easing prices, something he accused President Clinton of doing in 2000 in an effort to help Vice President Al Gore's presidential effort.
Most policy makers agree there are ways to bring down prices in the long term — including production incentives like those in the Bush-backed energy bill passed by Congress last month, construction of new refineries, development of alternate fuels and various conservation measures.
But with global demand soon expected to outstrip global supplies, the path of least resistance right now for energy prices seems up.
"I wish I could just snap my fingers and lower the price of gasoline for you," Bush told an Arizona audience Monday. "The markets don't work that way. I'd be snapping if I could do it."
There are some modest steps the government can take that could help, industry analysts suggest. They include freeing up motor fuel supplies that, under government summer-gasoline regulations are being held in storage until Sept. 15, and seeking to borrow gasoline from European and other trading partners.
Frank Verrastro, director of the Center for Strategic and International Studies' energy program, said the maximum drawdown rate of the Strategic Petroleum Reserve is 4.2 million barrels a day for the first 90 days. He said that could easily cover the output lost because of the storm, estimated so far at about one million barrels a day.
The real problem is "the refining bottleneck.... You don't just turn them back on."
American University political scientist James Thurber said that with the 2006 elections approaching, the high energy prices are a clear-cut political issue. "Whether it's a crisis or not depends on how long these high prices are sustained," he said.