Hurricane Harvey: US Tapping Emergency Oil Stockpile Amid Spiking Gas Prices

LAKE CHARLES, LA — Now that Harvey is affecting prices at the gas pump, Energy Secretary Rick Perry on Thursday announced he will release half a million barrels of crude oil from an emergency stockpile.

Perry said he signed off on immediate shipments of crude oil to the Phillips 66 refinery in Lake Charles, Louisiana. The oil will be replenished under an exchange arrangement that's similar to a loan.

The Energy Department will also look at other requests for oil from the Strategic Petroleum Reserve, an emergency stockpile that guards against supply disruptions, a spokeswoman said. (For more information on this and other White House stories, subscribe to Patch to receive daily newsletters and breaking news alerts. If you have an iPhone, click here to get the free Patch iPhone app.)

I authorized the SPR to execute an emergency exchange agreement authorizing crude oil to be drawn down from @ENERGY site. #Harvey Statement: pic.twitter.com/9TQXwiQfmd
— Rick Perry (@SecretaryPerry) August 31, 2017

The petroleum reserve was created in the wake of the 1970s Arab oil embargo. The reserve stores oil at four underground sites in Texas and Louisiana.

Gasoline prices have increased by at least 10 cents a gallon since Harvey came ashore and caused record flooding, shutting down oil refineries along the Texas and Louisiana coasts. More than one-fifth of U.S. refining capacity has been shuttered, according to S&P Global Platts.

Watch: How Might Hurricane Harvey Impact The Oil Industry And Environment?

Pump prices have surged. The average for a gallon of regular gasoline has risen from about $2.35 a week ago to $2.45 now, AAA reported. The price spike is more dramatic in some states such as Georgia, where the average cost per gallon of regular gas has climbed from $2.22 a week ago to $2.39 now.

It could take two weeks or longer before big refineries in the Houston area can recover from a record-setting deluge and resume normal operations.

QuickTrip, one of the nation's largest convenience store chains, told The Associated Press it will halt gasoline sales at about half of its 135 stores in the Dallas-Fort Worth metro area, as it anticipates shortages due to refinery and pipeline shut-downs.

Spokesman Mike Thornbrugh said Thursday the company will direct gasoline deliveries to half of its stores, and intends to have stores with gas in all parts of the metro area. All stores will remain open, though only half will have gasoline. The company is enacting its plan after several major refineries and a key gasoline pipeline shut down.

Oklahoma-based QuickTrip enacted a similar plan last year in metro Atlanta, where it has about 133 stores, when the Colonial Pipeline closed due to a leak in Alabama.

President Donald Trump has proposed selling nearly half the petroleum reserve amid an oil production boom that has seen U.S. imports drop sharply in the past decade.

Trump's budget calls for selling up to 270 million barrels of oil over the next decade, raising an estimated $16.6 billion. The proposal, on top of planned auctions expected over the next few years, could push the reserve below 300 million barrels by 2025. It now is at 679 million barrels.

By MATTHEW DALY, Associated Press

Photo credit: Eric Gay/Associated Press