HOUSTON, Sept. 12 -- There are plenty of US supplies of oil and refined products and no need for a sharp spike in retail prices in the wake of terrorist attacks on US targets, industry officials and analysts said Wednesday.
Still, President George W. Bush should "send a message to the world" by immediately announcing plans to dip into the nation's Strategic Petroleum Reserve if necessary, said George Gaspar with Robert W. Baird & Co. in Milwaukee.
"He should make it clear that's a tool that we stand ready to use. And he should immediately make the necessary connections with the oil companies to use it," Gaspar said. "When President Bill Clinton last opened that reserve, he had no arrangements in place with the oil companies, and it took weeks to move that oil."
President Clinton announced plans to draw down crude form the SPR in September 2000 to ease the tight heating oil market in the Northeast.
Immediately after terrorist attacks in New York and Washington, DC, Ali Rodriguez-Araque, OPEC secretary general, announced the group's member countries "remain committed" to providing enough oil to satisfy world market demands.
He refuted suggestions that some OPEC members could use oil as a weapon against the US and said the group is prepared to ramp up its spare production capacity if necessary to stabilize world oil markets. OPEC instituted a production cut of 1 million b/d on Sept. 1.
Meanwhile, October contracts for gasoline jumped by 1,490 Japanese yen to 27,460 yen/bbl Wednesday morning on the Tokyo Commodity Exchange prior to falling back to 26,890 yen/bbl by mid-day.
A service station operator in Oklahoma City hiked the price of unleaded gasoline to $5/gal after a supplier told him it was uncertain when the next shipment would be available and at what price.
Energy Sec. Spencer Abraham said, "At my direction the Energy Information Administration has investigated these reports and the supply situation, and we can report that there has been no supply disruption to justify such prices."
ExxonMobil Corp. and BP PLC moved quickly late Tuesday to reassure marketers that supplies would not be hampered outside of New York City and that there was no need to stockpile gasoline.
"We cannot control what independent dealers or distributors do, but we are encouraging them to act responsibly," ExxonMobil officials said Wednesday.
Equilon Enterprises LLC and Motiva Enterprises LLC, marketers of Shell and Texaco-branded fuel throughout the US, pledged Wednesday to hold gasoline and diesel fuel prices steady "for the next couple of days." That includes retail at company-operated stations and wholesale prices to independent dealers.
"We encourage consumers to buy gasoline as they normally would to minimize sharp swings in gasoline demand and availability," company officials said in a joint statement. "We encourage our thousands of independent dealers and wholesalers to exercise restraint in their pricing decisions."
The American Automobile Association also urged retailers not to impose large price increases. Nationwide, the retail price of unleaded gasoline is $1.54/gal, said AAA officials.
Gaspar called on other major integrated oil companies to freeze gasoline prices to stem such an "unjustified" spike in retail pump prices. Major US refiners took such a step to stop a similar price fly-up at the start of the Desert Storm attack on Iraq in January 1991. "I would expect no less of them now," Gaspar said.
"There is no justification for a run-up in retail prices. Governors in the states where this is happening should demand that station operators show financial justification for such price hikes," he said.
"Gasoline and diesel fuel inventories are adequate to meet demand, and refinery production remains strong," the American Petroleum Institute said Wednesday.
"We are aware of reports of lines forming at gas pumps in some sections of the country and of isolated panic-related incidents caused by fears that a disruption in the gasoline supply system could lead to higher prices or shortages. There are allegations that some gasoline stations are taking advantage of the situation to increase their prices," said API officials.
"API and its members do not condone and, in fact, strongly denounce any attempt to use this crisis to take advantage of consumers. If there is any illegal activity, those responsible should be prosecuted to the fullest extent of the law," they said.