Energy chief taps emergency oil reserve in wake of Harvey

Energy Secretary Rick Perry said Thursday he is releasing 500,000 barrels of crude oil from an emergency stockpile in a bid to prevent gasoline prices from spiking in the wake of disruptions caused by Harvey.

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

The Energy Department will review other requests for oil from the Strategic Petroleum Reserve, an emergency stockpile that guards against supply disruptions, a spokeswoman said.

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.

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.

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.