The US government is to release oil from the country's emergency stocks to help offset production cuts caused by Hurricane Katrina.
The clean up after Katrina may take months and cost billions of dollars
With many oil rigs or platforms reported missing in the Gulf of Mexico, the aim is to give US refiners a temporary stop-gap of crude supplies.
Yet with Katrina also closing nine major refineries, it remains to be seen what impact the move will have.
Oil prices fell back following the White House's announcement.
US light crude hit a high of $70.65 a barrel on Wednesday before dropping back to $68.94, down 87 cents in response to the news.
On Tuesday US light crude had touched a fresh record high of $70.85.
Meanwhile, London's Brent crude was down 55 cents to $67.02 a barrel on Wednesday, after hitting a record peak of $68.89 on Tuesday.
US Energy Department Secretary Samuel Bodman said the decision to open up the Strategic Petroleum Reserve was made on Tuesday night.
"In a word, it is going to be done," he said. "We will be tapping the supply."
"Our job is to get the infrastructure going again," Mr Bodman added.
The US Strategic Petroleum Supply totals almost 700 million barrels of crude oil, stored in five underground salt caverns in Texas and Louisiana.
Mr Bodman said four of the sites were operative.
No details have yet been released on the quantity of oil that will be made available to refiners.
In addition, the White House said it would waive certain air pollution regulations for gasoline and diesel in all 50 states until 15 September.
This will allow gasoline with higher evaporation rates and diesel with higher sulphur content to be sold.
"These waivers are necessary to ensure that fuel is available throughout the country," said the US Environmental Protection Agency.
The US Minerals Management Service said 95% of the Gulf of Mexico's oil output is now out of service following Katrina together with more than 83% of natural gas production.
The region accounts for about a quarter of US crude supplies.
US coast guards have reported many rigs missing in the Gulf of Mexico.
"We have confirmed reports of at least 20 oil rigs or platforms missing, either sunk or adrift, and one confirmed fire where a rig used to be," said one US Coast Guard official.
Anglo-Dutch oil giant Shell was one of many firms to see damage to its Gulf of Mexico facilities.
Aerial photos have shown significant damage to the top of its giant Mars platform.
The rig usually produces 220,000 barrels of crude and 220 million cubic feet of natural gas per day.
BP said seven of its oil platforms had toppled over but reported no major damage to its massive deepwater facilities.
Oil markets remained jumpy on Wednesday with so much offshore production still cut off.
"Initial damage assessments from companies are mixed, but the rumours on the second day are that the damage could be heavy and extensive, supply curtailments could be long," said oil analyst Tom Wallin of Energyintel.
Mr Wallin added that despite most attention being placed on oil prices, in his view natural gas supplies would be most affected by the damage caused by Katrina.
"Crude oil production could be replaced by a release of barrels from the US strategic reserve, there is no such safety valve for natural gas," he said.
"For gas, the fear is that commercial stocks could be severely dented, leaving inadequate inventories for the winter."
A ruptured gas pipeline was reported to be on fire in the Gulf by US coast guards on Wednesday.
In Wednesday trading, natural gas futures fell by 35.9 cents to $11.30 per 1,000 cubic feet, but this was almost double the price from a year ago.
Yet petrol prices remain the most immediate concern, with peak summer demand continuing in America, and fears that US stockpiles are too low.
Opec - the Organization of the Petroleum Exporting Countries - is considering raising its production ceiling at a meeting next month, although analysts have said this would be a mainly symbolic gesture.
"The scary thing is that the hurricane season is not over yet... so I don't see prices coming down," said Tony Nunan, manager for energy risk management with Mitsubishi Corp's international petroleum business in Tokyo.