Skip to comments.U.S. to lend Marathon 1 million barrels of oil
Posted on 09/02/2012 6:42:39 AM PDT by thackney
The U.S. Department of Energy will lend 1 million barrels of oil to Marathon Petroleum Corp. after the company requested it because of impacts related to Hurricane Isaac.
The government will lend the barrels from a Strategic Petroleum Reserve site in Louisiana.
Marathon will have to return the same quantity of oil within three months, plus additional premium barrels, which the department described as similar to interest.
The department said a loan is different from a release of the reserves, which the White House has said was an option if Isaac disrupted oil supplies and markets.
The reserves could begin delivering the barrels today, the department said.
Todays announcement is part of the broader federal effort to respond to those impacted by Hurricane Isaac, U.S. Energy Secretary Steven Chu said in a statement. This emergency loan from the Strategic Petroleum Reserve will help ensure Marathons refining operations have the crude oil they need to continue operating.
Marathon Petroleum Corp. began shutting down its Garyville, La., refinery Monday, one of the largest in the nation. The facility has a capacity of 490,000 barrels a day. It was running at reduced rates because of the storm.
Chu said the governments oil loan will include 1 million barrels of sweet crude.
Not as egregious as a general release to the market, but a bad precedent set treating the Strategic Reserve as a bank.
they must be expecting the price of oil to drop within the next 3 months...
right about the election
wonder how much the paid under the table.
I wonder how much Marathon donated to the Obomba campaign?
SPR does this all the time.
They didn't set the precedent.
Following a storm, this type of exchange, X barrels now, X + premium barrels returned later has been done several times before.
In my opinion, this exchange is what the SPR was set up to do. Provide oil in a timely manner following a supply interruption. There was a lot of the Gulf Shut down due to the Isaac. No major damage and the production platforms are coming back online, but they were shut down.
This type of exchange has been done several times before.
The offshore production was shut down 2~4 days. This is a reasonable request and has been done many times before.
1996 - April Pipeline Blockage, Seaway Pipeline System 900,000 bbls
1998 - August Maya Exchange 11,000,000 bbls
2000 - June Calcasieu Ship Channel Closure 1,000,000 bbls
2000 - August Establish NEHHOR 2,836,000 bbls
2000 - October Exchange 2000 30,000,000 bbls bbls
2002 - October Hurricane Lili 98,000
2004 - September Hurricane Ivan 5,400,000 bbls
2005 - September Hurricane Katrina 9,800,000 bbls
2006 - January Barge Accident, Sabine Neches Ship Channel 767,000 bbls
2006 - June Calcasieu Ship Channel Closure 750,000 bbls
2008 - September Hurricanes Gustav and Ike 5,389,000 bbls
These types of exchange are fine. It is the sales that are wrong in my opinion. The government should not sell off our reserve, but using the reserve following an interruption is appropriate.
This is kinda like borrowing from your kids piggy bank.
According to the article, this oil is going to a refinery. Seems more like two days of "supply".
Yeah, scratch my #14.
My nose is just outta joint today.
Was there ever any doubt that Obama would find some way finagle a release of oil from the reserve?
There at set rules which companies can request a release following an interruption in the oil supply. Delivery of oil to some refineries was shut down with Isaac. Heck, there was even a refinery in Tennessee that had a shutdown due to lack of delivery of oil from the Gulf.
You haven't convinced me that Obama and Salazar are acting out of the good of their hearts. I suspect something underhanded.
This isn't new and was done long before Obama was in office.
It cannot be done without an interruption is supply. The refinery had some, possible all, of their sources of oil interrupted when the offshore platforms shutdown for a few days with Isaac plowing through the area.
The amount loaned is about a two day supply for the refinery and they have a set amount of time to return the same amount of oil, plus a premium of additional amount to “pay” for the loan.
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