Enlarge imageBy Caroline Jacobs
PARIS (Reuters) - The West’s energy watchdog on Friday launched a rescue plan to ease fuel shortages in the United States after Hurricane Katrina hit refinery operations.
The International Energy Agency (IEA) announced that its 26 members, including the United States, would release two million barrels per day (bpd) of oil over an initial period of 30 days.
"It’s self-evident that we support the American bid," German Chancellor Gerhard Schroeder told a news conference in Berlin after Washington requested oil aid.
"Whatever the United States asks for they will be given," said EU foreign policy chief Javier Solana.
It is the first release by the OECD group of industrialised nations since 1991 when a U.S.-led coalition ejected Saddam Hussein’s Iraqi troops from Kuwait.
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U.S. gasoline prices have spiked by nearly a fifth over the past week, pushing up fuel prices around the world.
President George W. Bush has urged Americans to go easy at the pump in a country that accounts for more than 40 percent of world gasoline consumption.
The IEA rescue plan may be seen as an embarrassment to Washington, ill-equipped to cope with a storm that hit the core of its refining network along the Gulf coast.
Unlike European nations, the United States holds no state reserves of gasoline, having focussed its strategic energy efforts on building huge stocks of crude in case of disruption from the Middle East.
Washington announced it will draw down a million barrels daily of crude for a month from reserves of 700 million barrels.
The rest of the 2-million-bpd release will come from the other 25 IEA members, matching output lost from the Gulf Coast’s battered refineries.
"A large proportion of the remainder will be (refined) products ... we have suggested they prioritise products," said Claude Mandil, Executive Director of the Paris-based IEA.
European nations will supply most of the rest of the oil, supplemented by Japan, South Korea and Canada.
The IEA also drew a promise of support from OPEC to pump extra crude supplies. The Organisation of the Petroleum Exporting Countries meets later this month and is expected to lift output quotas, but has only a little spare capacity.
Crude oil prices this week broke above $70 a barrel, approaching levels not seen in real terms since 1980, the year after the Iranian revolution.
Prices eased on Friday, ending down $1.90 at $66.90 for U.S. crude on the news of the IEA’s oil release.
Mandil said stocks will be drawn down locally in each country, leaving the international oil market to determine how much is shipped to the United States.
European oil will take at least 10 days to reach U.S. shores and tanker space is in short supply with many commercial ships already under charter and crossing the Atlantic.
The agency, created after the 1973-74 oil crisis to protect consumers, requires member countries hold stocks of at least 90 days of net imports.
