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WASHINGTON - The US Energy Department will start a new push in the spring to refill the nation's emergency oil stockpile by purchasing about 11 million barrels of crude, US Energy Secretary Sam Bodman said today.
"In the spring, that is to say about two months from now, we will begin the fill," Bodman told reporters. "At current market prices, we believe that we can purchase about 11 million barrels of oil over the course of a few months, so that would be approximately 100,000 barrels per day."
The money to buy the oil for the Strategic Petroleum Reserve will come from the US$600 million ($856 million) the Energy Department raised when it sold 11 million barrels of reserve oil to US refiners in 2005 after Hurricane Katrina disrupted petroleum supplies, a department spokesman said.
The reserve was created by Congress in the mid 1970s after the Arab oil embargo. The stockpile has a capacity to store about 727 million barrels of oil, but now holds 691 million barrels at four underground storage sites in Texas and Louisiana.
It will take the department until the end of the summer to get the 11 million barrels of replacement oil and put it in the reserve, the spokesman said.
Bodman said the department would fill the stockpile "in a manner that does not adversely affect the market or raise petrol prices."
In the past, the government has delayed putting oil in the reserve to make sure needed supplies were not take off the market and petroleum product costs did not jump.
However, oil traders appeared to believe the crude purchases would have a market impact. The price of oil at the New York Mercantile Exchange surged after the department's announcement. US crude last traded up US$2.42 or more than 4 per cent to US$55 a barrel.
"The government can spin it any way they like, but the history, from the 1970's on, is very clear. During periods when the reserve is being increased, prices tend to rise," said Tim Evans with Citigroup Global Markets.
- REUTERS
