Release of oil reserves has little effect

The US government on Wednesday agreed to lend refiners small quantities of oil from its strategic emergency stockpile to help ease the shortage of petrol caused by Hurricane Katrina.
But the relief it caused in the overheated oil market was cut short when it became clear that the move would have little impact on the problem and was as much a political gesture as an economic one.
In fact, helping the US deal with the loss of 20 per cent of its oil production and 10 per cent of its refining capacity has become a global tug of war between three powerful players.
The first is US President George W. Bush, who is facing some of his lowest approval ratings of his career courtesy of Iraq and oil. But he still has his most potent weapon to use: a broad release of oil from the same stockpiles that are now lending refiners small packets of oil.
This time the reason for tapping the reserves appears almost exactly what Mr Bush says the 700m barrels are meant for – a genuine shortage in the market.
But what the US now needs is petrol rather than crude oil.
The US has no emergency reserves of petrol while commercial reserves are near a two-year low and dwindling by the day as refiners are unable to replenish their storage tanks.