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President Agrees to Release Oil from Emergency Stockpiles

WASHINGTON, D.C. -- As gasoline continues to climb toward $3 a gallon, the Bush administration agreed to release oil from emergency stockpiles to help Gulf Coast refiners hobbled by a loss of shipments due to Hurricane Katrina, the Associated Press (AP) reported. But the move is not expected to make a dent in fuel prices.

The decision to tap the Strategic Petroleum Reserve was an effort to keep production of gasoline and other fuels steady. Even so, gasoline prices leaped nationwide as the extent of damage to the nation's oil-distribution network became more apparent.

Tapping the government reserves will "certainly help those companies and those refineries to function, whereas they wouldn't be functioning without a supply of crude oil," Energy Secretary Samuel W. Bodman told the Associated Press.

The oil reserves -- consisting of some 700 million barrels of crude oil stored in underground salt caverns in Texas and Louisiana -- were last tapped in September-October 2004 during disruptions caused by Hurricane Ivan.

Some 95 percent of the Gulf of Mexico's oil output was out of service, according to the U.S. Minerals Management Service. Nearly five million barrels of production have been lost since Friday because of the powerful storm and the shutdown of eight refineries.

"It is clear the consequences of the hurricane have become more widespread," Stephen Johnson, the administrator of the Environmental Protection Agency, said.

The EPA announced it would temporarily allow the sale of higher-polluting gasoline in Alabama, Florida, Louisiana and Mississippi because those states can't provide enough fuel to consumers that meets Clean Air Act requirements. The agency also temporarily eased diesel fuel sulfur restrictions and rules on gasoline evaporation nationwide.

The petroleum reserve was established to cushion oil markets during energy disruptions, but Bodman said the action would do little to ease the rising gasoline prices soaring toward $3 a gallon.

"Will it make a major difference in the price of gasoline? Based on the numbers that I see, probably not," Bodman told the AP. "It'll help some, but we have significant refining capacity that is dysfunctional, either because they don't have electric energy or because they're flooded, or both."

He also ruled out action to impose a national ceiling on the price of gasoline.

"I don't think you'd find a lot of support for that," the energy secretary told CNN.

The production and distribution of oil and gas remained severely disrupted by the shutdown of a key oil import terminal off the coast of Louisiana and by the Gulf region's widespread loss of electricity, which is needed to power pipelines and refineries.
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