Since November 2001, the US administration has been diverting crude oil supply from the market to the strategic petroleum reserve (SPR), which now stands at a record 700m barrels – in addition to the vast reserves held by the other 25 member countries of the International Energy Agency (IEA) club of industrialised oil consumers. The government has offered to tap those reserves as an emergency response to the massive supply disruptions caused by Katrina. But the SPR will not be much help. Releasing SPR crude will not offset a looming shortage of natural gas and, given refining constraints, will increase product supply by only a small amount. Its effect on prices will be marginal at best.
