In the wake of Hurricane Katrina, most news reporting is focused on the horrible human tragedy caused by this devastating storm. As it should be. Like all Americans, Sen. Bingaman’s thoughts remain with residents across the coastal South in these very, very difficult days.
As energy reporters, though, most of you are focused instead on the damage that this disaster has caused to our nation’s energy system. With fuel prices at record highs (and still climbing), Sen. Bingaman remains very concerned about the toll that these rising prices is taking on the American economy, on American consumers and on American jobs.
Sen. Bingaman asked his staff to prepare the following summary, to add context that may help with your coverage of the serious, complex and difficult energy challenges that our nation faces in the days, weeks and months ahead. In addition, we hope that this summation provides a helpful update on the national response to this energy emergency.
REMINDER: Senate Energy Committee holds a hearing this Tuesday to examine high gasoline prices and their causes – including those caused by Hurricane Katrina. The hearing will be in Dirksen 106 starting at 2:30 p.m. We hope you can attend.
Critical Actions Taken to Address High Gasoline Prices
Hurricane Katrina was a catastrophic event which destroyed crucial American oil, gas and refining assets. In the Gulf of Mexico, the hurricane took some 90 percent of oil production and 80 percent of natural gas production off-line and removed 10 percent of gasoline production. It shut down nine refineries completely, and has significantly constrained production at at least seven others. In addition, it shut down key energy infrastructure such as pipelines and electricity lines tied to pumping stations. This series of catastrophic and unpredictable events has pushed gasoline prices higher in what was already a very tight market.
Sen. Bingaman has been working to identify important actions to help bring down energy prices in the aftermath of this terrible event, and has communicated those suggestions to the Administration. Since Monday, the Department of Energy and other Federal agencies have taken several important steps to help relieve rising gasoline costs.
Strategic Petroleum Reserve Opened & Released
A total of 9 million barrels of crude oil, to date, has been released from the Strategic Petroleum Reserve to help refiners who do not have enough oil to make gasoline as a result of the damage from Hurricane Katrina. These loans will help refineries to make more gasoline to be put into the fuels system. As more refineries come back on line, additional loans may be requested.
IEA Exchange to Provide More Gasoline
The Secretary of Energy has announced that the International Energy Agency has agreed to make 60 million barrels of petroleum product, both crude and gasoline, available to the market. As part of the agreement, the will release an additional 30 million barrels of crude from the SPR. The oil will be put up for bid next week and transported as soon as possible. Fuel shipments of gasoline and other refined products from Europe to the have started, but will take several days to reach ports. This will help get more gasoline flowing to American markets.
Fuel Flexibility Increased
In order to lessen gasoline supply disruptions caused by Hurricane Katrina and facilitate gasoline supply transfers to affected regions, the EPA has temporarily lifted rules imposing certain regional requirements on gasoline and diesel fuels. Yesterday, the President allowed foreign-flagged vessels to ship fuel between ports until Sept. 19 (with the potential for an extension of this authority, if needed), also facilitating gasoline shipments to affected regions. Both of these actions will help facilitate imports of fuels from outside the and to get more gasoline to regions with low supplies.
Pipelines restored
The damage from Hurricane Katrina included the downing of three key oil and gasoline pipelines – the Capline, Colonial and Plantation systems. With the restoration of electricity to key pumping stations along these lines, both crude oil and refined products are now flowing (though at a reduced rate). The major south-north crude oil pipeline, Capline, which delivers crude oil to the upper Midwest, is operating at about 66 percent capacity and will be available to move crude oil from the SPR into the Chicago area for refining. Colonial is expected to reach 74 percent of its capacity by Sunday, and Plantation is now flowing at 95 percent of its capacity.
Oil Import Capabilities Restored
The Louisiana Offshore Oil Import Terminal (LOOP) was shutdown completely as a result of Hurricane Datrina. This resulted in the loss of more than 1 million barrels of daily oil imports to the The LOOP is now operational from St. James Terminal.
Price Gouging Hotline Established
The DOE has established a Gas Price Hotline. In addition to notifying local authorities, consumer can report concerns about price gouging by filling out the form at http://gaswatch.energy.gov/. DOE will share this information with the Federal Trade Commission (FTC) and state attorneys general for their follow-up.
Call for FTC and CFTC Oversight
Sen. Bingaman and many others have called upon the Federal Trade Commission and the Commodity Futures Trading Commission to exercise vigorous oversight over energy markets and any perceived price manipulation.
Gas Price Hearing Called
The Senate Committee on Energy & Natural Resources will hold a hearing at 2:30 pm on Tuesday, Sept. 6, to examine high gasoline prices and their causes, including the effects of Hurricane Katrina.
