Europe to send emergency oil to US to ease crisis
Fri Sep 2, 2005 3:40 PM BST
PARIS (Reuters) - Europe will dip into its emergency stocks of gasoline to help the United States through an energy crisis that began when Hurricane Katrina smashed into Gulf coast refiners, EU governments said on Friday.
Spain and Germany said they were ready and able to send fuel across the Atlantic in an operation coordinated by the West's energy watchdog, the International Energy Agency. A U.S. government official confirmed Washington had asked for help and said most of the gasoline would come from Europe.
EU nations have watched in horror as the world's richest country struggles with the aftermath of Katrina. Thousands are feared dead and troops in the flooded city of New Orleans have been told to shoot-to-kill to crack down on looting.
Gasoline prices have soared by nearly a fifth over the past week and President George W. Bush has urged Americans to go easy on fuel. Unlike the IEA, the United States has only emergency reserves of crude and a small stockpile of heating oil.
"It's self-evident that we support the American bid," German Chancellor Gerhard Schroeder told a news conference in Berlin.
But Europe's pledge of gasoline may carry a political price for Washington. Differences over trade and foreign policy have strained relations between the United States and some EU member states including Germany and France.
Schroeder expected a massive two million barrels per day of oil to be shipped to the United States over the next month. The United States has lost about one million bpd of gasoline output.
"We assume that would lead to there being sufficient energy reserves in the market and, second, we would wish the pressure on the prices of oil products to be lessened," Schroeder said.
Speaking at a meeting of EU foreign ministers in Wales, EU foreign policy chief Javier Solana said: "Whatever the United States asks for they will be given."
IEA TO MAKE FORMAL REQUEST FOR OIL
A Spanish official told Reuters the IEA had contacted Madrid on Thursday and indicated there would be a formal request for oil on Friday. Spain wanted a "balanced proposal" involving all IEA members - 26 industrialised nations including Japan.
"We are waiting (for the IEA request) and I think we will tell them 'yes'," a spokesman at Spain's Industry Ministry said.
Crude oil prices have hit levels unseen in real terms since 1980 - the year of the Iran-Iraq war and a year after the Iranian revolution that choked off supply lines.
Prices fell by $1.67 a barrel to $67.80 on Friday on news that Europe was riding to the aid of the United States. Gasoline also eased.
But 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 Paris-based IEA declined to confirm it would release oil to the United States. "We're still consulting with all our members and the damage assessment is still going on," an IEA spokeswoman said on Friday.
EU members Germany, France, Spain and Italy have substantial emergency reserves. The IEA last dipped into its emergency reserves in 1991 when a U.S.-led coalition ejected Iraqi troops from Kuwait. The agency, created after the 1973-74 oil crisis to protect consumers, must hold stocks of 90 days of net imports.
Roland Berger Strategy Consultants
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