Europe to send emergency oil to US

By Caroline Jacobs

PARIS (Reuters) – Europe will dip into its emergency
reserves of gasoline to help the United States through an
energy crisis that began when Hurricane Katrina smashed into
Gulf coast refiners, EU governments said on Friday.

Spain and Germany said they were ready and able to send
fuel across the Atlantic in an operation coordinated by the
West’s energy watchdog, the International Energy Agency. The
United States confirmed it had requested assistance.

EU nations have watched in horror as the world’s richest
country struggles with the aftermath of Katrina. Thousands are
feared dead and troops in the flooded city of New Orleans have
been told to shoot-to-kill to crack down on looting.

Gasoline prices have soared by nearly a fifth over the past
week and President George W. Bush has urged Americans to go
easy on fuel. Unlike the IEA, the United States has only
emergency reserves of crude and a small stockpile of heating
oil.

“It’s self-evident that we support the American bid,”
German Chancellor Gerhard Schroeder told a news conference in
Berlin.

He expected a massive two million barrels per day of oil to
be shipped over the next month — more or less offsetting lost
output from the Gulf coast’s battered refineries.

“We assume that would lead to there being sufficient energy
reserves in the market and, second, we would wish the pressure
on the prices of oil products to be lessened,” Schroeder said.

Speaking at a meeting of EU foreign ministers in Wales, EU
foreign policy chief Javier Solana said: “Whatever the United
States asks for they will be given.”

IEA TO MAKE FORMAL REQUEST FOR OIL

A Spanish official told Reuters the IEA had contacted
Madrid on Thursday and indicated there would be a formal
request for oil on Friday. Spain wanted a “balanced proposal”
involving all IEA members – 26 industrialized nations including
Japan.

“We are waiting (for the IEA request) and I think we will
tell them ‘yes’,” a spokesman at Spain’s Industry Ministry
said.

Crude oil prices have hit levels unseen in real terms since
1980 – the year of the Iran-Iraq war and a year after the
Iranian revolution that choked off supply lines.

Prices fell by $1.07 a barrel to $68.40 on Friday on news
that Europe was riding to the aid of the United States.
Gasoline also eased.

But European oil will take at least 10 days to reach U.S.
shores and tanker space is in short supply with many commercial
ships already under charter and crossing the Atlantic.

The Paris-based IEA declined to confirm it would release
oil to the United States. “We’re still consulting with all our
members and the damage assessment is still going on,” an IEA
spokeswoman said on Friday.

EU members Germany, France, Spain and Italy have
substantial emergency reserves. The IEA last dipped into its
emergency reserves in 1991 when a U.S.-led coalition ejected
Iraqi troops from Kuwait. The agency, created after the 1973-74
oil crisis to protect consumers, must hold stocks of 90 days of
net imports.

(Additional reporting by Juan Navarro and Emma Ross-Thomas
in Madrid, Dave Graham in Berlin and Pieter Nielsen in
Brussels)