Europe on standby to send petrol to US

http://news.ft.com/cms/s/baac872c-1b0c-11da-a117-00000e2511c8,_i_rssPage=80fdaff6-cbe5-11d7-81c6-0820abe49a01.html ^

[Budgie]

European countries were on Thursday preparing to release emergency stockpiles of petrol as the US confirmed that some refineries hit by Hurricane Katrina would remain shut for several months.

Earlier US officials had estimated the closures at only one to two weeks.

Officials from member governments of the International Energy Agency, the energy watchdog of industrialised countries, said they were now waiting only for the US to agree to such a measure.

The International Energy Agency, the organisation that coordinates the release, would say only that it was still assessing whether the size of the shortfall caused by Katrina warranted calling an emergency release.

Germany has assured the IEA that it would release stocks if asked to participate if needed. Germany holds the largest number of barrels of petrol in public storage. These extra barrels could hit the markets within one or two days. France, Spain and Italy also have large emergency gasoline reserves. However, should the gasoline be released, European countries are likely to seek an economic or political quid pro quo from Washington.

Europe has 168m barrels of petrol reserved for emergencies, with 53m of those held by governments or agencies. The US holds only emergency stockpiles of crude oil.

Jittery motorists formed lines of up to a mile long outside gasoline stations in several southern US states on Thursday, in anticipation of fuel shortages over the Labor Day weekend.

In scenes reminiscent of the oil crises of the 1970s, drivers drained pumps at stations in Georgia and Mississippi.

People queued for hours at the few petrol stations that were open along the Mississippi coast, clogging up roads and diverting police resources.

Fuel shortages stretched more than 100 miles north up the main highways running into the hurricane-hit area, as pumps were drained by evacuees fleeing the area and relief vehicles on their way in.

At some filling stations hours inland from the coast, locals appeared to be the main source of demand amid mounting fears of a more widespread shortage. Quotas were being imposed in many places.

Police were present at the busiest stations, marshalling traffic and maintaining order.

With so much of the energy infrastructure in the south damaged, analysts said the petrol shortages could spread. Hurricane Katrina shut down at least eight crude oil refineries, responsible for producing about 1.8m barrels of refined products - about 10 per cent of the nation's total capacity.

Experts warned that shortages could spread up the east coast of American. Adam Sieminski, analyst at Deutsche Bank, said that if all Americans topped up their tanks with an extra five gallons of gasoline it would equate to 27m barrels of extra demand.

There have already been examples of price gouging, with one Georgia station charging $5.19 per gallon - almost double the national average.

Two lines transporting gasoline and other fuels to the rest of the US are also running at a third of capacity.

Frank Vervastro, at the Center for Strategic and International Studies, said the shortages could worsen if consumers panicked. “Normally drivers fill their tanks half way or slightly more,” he said. “If many now start to fill their tanks to the top, the shortages could become more acute.”

Seth Kleinman, an analyst at PFC Energy, a consultancy, said it could take up to a month for supplies to return to normal and that prices could remain elevated beyond this time. “This supply shock sets the stage for extremely high prices for the foreseeable future,” he said. “With prices already high due to strong global demand, the last thing we needed was a supply shock.”

The Consumer Federation of America estimates that the average US family now spends close to $2,000 a year on gasoline - up from around $1,300 in 2002. Households with incomes under $15,000 - about a fifth of US families - spend more than 10 per cent of their income on gasoline. A survey by the CFA suggested that three quarters of Americans were highly concerned about gasoline prices over the next five years.

[atomicpossum]

However, should the gasoline be released, European countries are likely to seek an economic or political quid pro quo from Washington.

I would be EXTREMELY careful about what I agree to at this moment.

[Sax]

However, should the gasoline be released, European countries are likely to seek an economic or political quid pro quo from Washington.

Yeah, 'cause it's not like they owe us for saving them from themselves twice in the last 100 years. I would like to think the balance sheet is tipped in our favor enough that they would consider it the least they could do. Quid pro squat is more like it - so they don't have to be all take and no give.