Gas Prices Rise Sharply; Bush to Tap Reserves The Bush administration will open the nation's strategic petroleum reserve and suspend some air-quality regulations in an effort to control soaring gasoline prices driven by Hurricane Katrina. The price of a gallon of unleaded gas shot up to more than $3 per gallon in many areas.
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Gas Prices Rise Sharply; Bush to Tap Reserves

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Gas Prices Rise Sharply; Bush to Tap Reserves

Gas Prices Rise Sharply; Bush to Tap Reserves

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

Hurricane Katrina is leaving its mark at the gas pumps. Gasoline was selling for more than $3 a gallon in many parts of the country. The storm disrupted the vast energy production and distribution facilities throughout the Gulf Coast. And today the Bush administration said it would open the nation's Strategic Petroleum Reserve to help address the problem. NPR's Jim Zarroli reports.

JIM ZARROLI reporting:

Ninety-five percent of the oil refineries in the Gulf have been shut down since Hurricane Katrina swept through the region. Some are flooded and may have sustained permanent damage, but even those that were spared are offline because of power outages. And with refineries down, many energy traders are growing increasingly worried about gasoline supplies. Dan Pickering is head of Pickering Energy Partners.

Mr. DAN PICKERING (Pickering Energy Partners): The issue here continues to be that demand has not abated but supply has been reduced. And so you've seen wholesale prices move up 20 to 30 percent just in the last few days.

ZARROLI: As supplies have tightened, Katrina's impact is being felt in parts of the country far from the Gulf. At a gas station in downtown Chicago today, regular unleaded gasoline was selling for 2.99 a gallon. Paul Popernack showed up at the station carrying a gasoline can. Popernack said he had been trying to find a station selling inexpensive gas when his car ran out of fuel.

Mr. PAUL POPERNACK: I took a chance, and I gambled and I lost on how much gas I could get by with, and now I have to go back. So I'm paying the price of being a penny-pincher with the gas, I guess.

ZARROLI: With prices climbing, the Bush administration announced several moves aimed at easing the shortage. Energy Secretary Sam Bodman said the government would lend crude oil from the Strategic Petroleum Reserves to energy companies that are having trouble finding enough oil. Bodman acknowledged this would do little to solve the problem of refining capacity.

Secretary SAM BODMAN (Energy Department): It will help, but it's not going to solve the problem. It's a little bit like the energy bill; no one thing solves the problem. We're going to need a lot of help in a lot of different directions.

ZARROLI: The government will also ease certain air quality standards through September 15th in order to expedite gasoline production. Bodman noted that much of the nation's oil and gas infrastructure is located in the Gulf and that it had been severely wounded by the storm. He said the industry would recover, but it will take time.

Sec. BODMAN: We're doing everything we can do at the federal level and at the state level, I know, to relieve the pressures there. I wish I had a magic wand that could solve the problem. I don't. So that consumers ought to expect, I believe, prices they don't like to see. I would hope that we would find ways of people conserving their use of fuel, both for economic reasons and for the common good.

ZARROLI: Meanwhile, many big oil and gas companies continue to assess the damage to their facilities. At least one oil company said it was having trouble finding helicopters so it could inspect its rigs. Dan Pickering says oil and gas companies will do what it takes to get their facilities restarted.

Mr. PICKERING: With commodity prices where they are, the energy industry certainly has a big incentive to spend that money, to push as hard as they can because they're obviously foregoing a lot of profitability with shut-in production at current prices.

ZARROLI: But it may be many days before these companies understand the extent of the damage they've suffered and what they have to do to get back online. Jim Zarroli, NPR News.

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