Katrina and the SPR

KATRINA AND THE SPR….Associated Press reports that President Bush will announce later today whether he will release oil from the Strategic Petroleum Reserve to make up for production losses caused by Hurricane Katrina:

Adminstration officials, speaking on the condition of anonymity because they were not authorized to speak publicly, said Bush seemed likely to authorize a loan of some oil from the Strategic Petroleum Reserve but that details remained in flux.

….Sen. Charles Schumer, D-N.Y., who was pushing the White House to dip into the reserve even before Hurricane Katrina hit to help bring down gas prices, said, “If there was ever a time for the Strategic Petroleum Reserve to be tapped, it would be now.”

For what it’s worth, I think Schumer was wrong before but correct now. The SPR is not meant to be used as a market stabilization mechanism or, even worse, as a blunt instrument for hammering down oil prices. It’s meant to be used in emergencies. That’s exactly what Katrina is, and releasing a few million barrels from the reserves to make up short-term production shortfalls over the next few weeks is well justified.