Bush says storms show need for additional refining capacity in US

New York (Platts)--26Sep2005

US President George W Bush said Monday the federal government would again
make crude from the nation's Strategic Petroleum Reserve available to
refiners, if needed, to cover any supply shortages in the wake of Hurricane
Rita.
     "We'll use the [Strategic Petroleum Reserve] to help the refineries with
crude oil," Bush told reporters during a briefing on Rita's impact to the US
energy industry.
     In the aftermath of Hurricane Katrina last month, the Department of
Energy loaned 13.2-mil bbl of crude from the SPR and sold another 11-mil bbl
from the emergency stockpile.
     Bush, in a detailed and wide-ranging review of US energy markets, also
said Katrina and Rita demonstrated the need for an expansion of US refining
capacity.
     Valero and Total have said their refineries in Port Arthur, Texas,
will be idled for an extended period of time to repair damage caused by Rita,
and four large refineries in Louisiana and Mississippi remain idled in the
wake of Katrina.
     Bush said he expected 1.8-mil b/d of US Gulf refining capacity to be
returned "relatively quickly," but noted officials "don't know" the status of
another 1.7-mil b/d.
     Industry observers have said a shortage of refined products, not crude,
is the main problem driving higher prices today, and say new refining capacity
is needed in the US in order to produce more gasoline, diesel, heating oil,
and jet fuel.
     Bush also said the US would maintain post-Katrina waivers that allow
off-season grades of gasoline and diesel to reach the market in order to
increase supplies.
     The federal government will also keep in place a waiver of the Jones Act,
which requires all materials shipped between US ports to be carried on vessels
flying a US flag. With the waiver, oil products can be shipped between US
ports on vessels flying any flag.

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