Nation's emergency oil stockpile tapped to try to limit gas price boosts
The Energy Department is cracking open the nation's emergency stockpile of oil reserves for the first time in five years to help ease the impact of Hurricane Harvey on gasoline prices.
Energy Secretary Rick Perry on Thursday ordered the release of 1 million barrels of oil from the Strategic Petroleum Reserve, a massive government underground storage system designed to provide an emergency backup in event of oil supply distruptions.
The move comes amid rising gas prices following the temporary closure or planned shutdowns at 16 refineries along the Texas Gulf Coast that have been overwhelmed by flood waters. About 25% of the nation's refining capacity is offline indefinitely due to the monster storm and flooding, according to the Energy Department.
For some refineries that remain open, obtaining oil to make gasoline is an issue. Closure of ports in Houston and Corpus Christi reduced capacity of the critical Colonial Pipeline, and the inaccessibility of certain roads has undermined access to oil.
Thursday's ordered release will allow the Energy Department to deliver the crude oil to a Phillips 66 refinery.
The national average of gas could peak at 25 cents higher than before Harvey, Oil Price Information Service analyst Tom Kloza said. Nationally, prices averaged $2.45 a gallon on Thursday, up 10 cents from a week ago and hitting a high for the year, according to AAA.
The nation had nearly 230 million barrels of gasoline inventory as of Friday, according to the Energy Information Administration.
The Energy Department's release of Strategic Petroleum Reserve oil marks the first time it has been tapped since Hurricane Isaac in 2012 when 1 million barrels were released.
The drawdown equals a fraction of the Strategic Petroleum Reserve, which had nearly 679 million barrels of oil as of Friday.
"The department will continue to provide assistance as deemed necessary, and will continue to review incoming requests for SPR crude oil," spokeswoman Jess Szymanski said in a statement. "Should the secretary decide to approve additional requests for an emergency exchange of crude oil from the SPR, the public will be notified."
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