Bodman says believes gasoline supplies will meet summer demand

Washington (Platts)--10Apr2007

Gasoline supplies should be adequate to meet surging US demand during the
summer driving season, US Energy Secretary Samuel Bodman told reporters
Tuesday, noting that the sharp increases in prices in the past several weeks
was "entirely understandable" given recent market conditions.

"As best we can tell, the gasoline price increase was the function of [a
sharp run-up] in crude oil prices" due to geopolitical concerns and a number
of refinery outages, Bodman told reporters following a speech at a US Federal
Trade Commission energy markets conference.

US regular-grade retail gasoline prices have jumped more than 20 cents in
the past two weeks, according to the US Energy Information Administration,
which Monday pegged the average price nationwide at $2.802/gal.

Bodman noted that crude oil prices have fallen in the past week largely
due to Iran's decision to release 15 British sailors that had been held
hostage. Lower crude oil prices could provide some relief to gasoline prices,
he said.

Lower crude prices also should make it possible for Energy Department to
purchase 4 million barrels of crude for the Strategic Petroleum Reserve, he
said. DOE last week rejected all offers to supply the nation's strategic
crude reserve, saying the bids were too low and failed to give fair value to
taxpayers.

"We undertook the effort to repurchase at a time when there was a lot of
uncertainty in the market," Bodman said. "As a result, the bids we got were
not very attractive."

DOE is slated to hold another solicitation in mid-April to purchase the
crude oil, which will begin to replace the crude oil sold from the reserve in
the wake of 2005's Hurricane Katrina. He said he was "confident" that the time
would come that market conditions would encourage attractive purchases for the
SPR.

--Cathy Landry, cathy_landry@platts.com