Isaac prompts loan from petroleum reserve

A rig extracts crude oil from the Gulf of Mexico in 2010. A rig extracts crude oil from the Gulf of Mexico in 2010. Flickr user kk

The Obama administration is loaning 1 million barrels of oil to Marathon Petroleum in the wake of Hurricane Isaac, the Energy Department announced on Friday.

The oil loan, which will come out of the nation’s Strategic Petroleum Reserve, is not the same thing as an official release of oil from the 727 million-barrel SPR, an action that would have political, economic, and foreign-policy implications.

“Today’s announcement is part of the broader federal effort to respond to those impacted by Hurricane Isaac,” Energy Secretary Steven Chu said in a statement. “This emergency loan from the Strategic Petroleum Reserve will help ensure Marathon’s refining operations have the crude oil they need to continue operating.” Marathon will return the same quantity of oil to the reserve in the next three months.

The Energy Department has loaned oil in similar, emergency-type situations eight previous times, most recently following Hurricane Gustav in 2008, the department said.

The Interior Department said on Thursday that because of Hurricane Isaac, almost 95 percent of all the daily oil production in the Gulf of Mexico—which accounts for about a quarter of all U.S. oil production—was halted. Almost three-quarters of all natural-gas production was stopped as well.

Oil prices have not gone up much as a result of Isaac yet. In fact, a highly anticipated speech by Federal Reserve Chairman Ben Bernanke on Friday morning about the economy has affected oil prices just as much, if not more, than Isaac. Analysts predict that there won’t be any long-term price impact because of the storm.

This is due in part to the fact that most oil companies had evacuated and stopped production well before the storm entered the Gulf of Mexico, so it eased traders’ concerns that there would be long-term infrastructure damage and lengthy production delays, problems that caused then-President George W. Bush to tap the SPR following the historic 2005 hurricanes Katrina and Rita.

Rumors about whether the Obama administration will work with other countries and the International Energy Agency to conduct a coordinated release from the SPR continue. But White House spokesman Jay Carney continues to offer no insight except for the notion that all options are on the table.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.