In wake of Hurricane Katrina, Gov. Blagojevich renews call to President Bush to release oil from Strategic Petroleum Reserve to bring down gas pri

DUQUOIN - As Hurricane Katrina blasts through the heart of oil and refinery operations in the Gulf of Mexico, Illinois Gov. Rod R. Blagojevich today once again called on President George W. Bush to help bring down the cost of gasoline in the United States by releasing additional oil supplies from the Strategic Petroleum Reserve.  The Governor also sent a letter to Illinois Attorney General Lisa Madigan asking her to investigate potential price gouging at gas pumps. 

 

 "Two weeks ago, I wrote to you, asking that you authorize the release of thirty million barrels of oil from the nation's Strategic Petroleum Reserve in order to help bring down gas prices for consumers.  With the onset of Hurricane Katrina and its effect upon oil shipments and production from the Gulf Coast, I respectfully request that you reconsider the option of releasing oil from the Strategic Petroleum Reserve.  The Gulf of Mexico produces approximately one quarter of our national domestic output of oil.  Limitations to that supply will likely have an extremely detrimental impact on oil prices and gas prices.  Prices are expected to increase by .25 to .45 cents a gallon today alone.  As a nation, we need to take action, and we need to take action now.  Only you can single-handedly authorize the release of oil from the Strategic Petroleum Reserve and save consumers money every time they fill up their cars," the Governor wrote in his letter to President Bush.

 

On Sunday, Hurricane Katrina, a Category 4 storm, halted an estimated 633,000 barrels of daily crude oil production, 42% of the daily average output from the Gulf Coast.  At least eight refineries with a combined capacity of 1.8 million barrels per day were also shut down, according to operators.  Monday morning, gas stations across Illinois increased their prices - in some cases as much as 40 cents to nearly $3 a gallon. 

 

Tapping the strategic oil reserve in response to a Hurricane is not unprecedented.  Last year when Hurricane Ivan disrupted gas supplies, the government exchanged more than 5 million barrels of crude oil from the Strategic Petroleum Reserve.

 

In his letter to President Bush, the Governor pointed out that in 2000, an oil swap was used to withdraw 30 million barrels over a 30-day period.  The move helped bring prices down by more than $6 per barrel and wholesale gasoline prices by $0.14 per gallon.  At that time, a barrel of oil cost $33.  Today, that same barrel of oil costs $70.

 

"After we made our initial request two weeks ago, your office rejected our request, saying that the Strategic Petroleum Reserve could only be used in cases of emergencies, and that sky rocketing gas prices was not an emergency.  I'm sure we can all agree that a Category 4 hurricane cannot be considered anything but an emergency, meeting the criteria your office has set for authorizing the release of oil," the Governor wrote. 

 

Governor Blagojevich also sent a letter to Attorney General Lisa Madigan asking her to investigate potential price gouging at Illinois gas stations. 

 

"While losing a significant portion of our nation's domestic oil production will likely cause an increase in oil prices, it is critical that we ensure that no one be allowed to use this natural disaster as an excuse to exploit consumers.  The vast majority of gas stations would never consider using a natural disaster like a hurricane to increase prices any more than dictated by the market, but there are always a few bad apples.  Unfortunately, the actions of those few bad apples could mean higher gas prices for drivers.  Considering the high price of gas already, we must take every possible step to prevent price gouging from taking place," Governor Blagojevich wrote.