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.
“Today’s 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 Marathon’s 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 government’s oil loan will include 1 million barrels of sweet crude.
Here is announcement from Institute for Energy Research on this loan. As you can tell, they are no friend of Obama and believe he would use the SPR to raise his chance at a 2nd term.
But even in making that clear they don’t trust him, they do point out that this loan is appropriate. It is what the SPR was created to do: replace oil supply interruptions.
IER Statement on Post-Isaac SPR Loan
http://www.utilityproducts.com/news/2012/09/02/ier-statement-on-post-isaac-spr-loan.html
The Institute for Energy Research issued the following news release:
Following reports that Energy Secretary Steven Chu approved a loan of 1 million barrels of sweet crude oil from the Strategic Petroleum Reserve to the Marathon Petroleum Company, Daniel Kish, IER’s Senior Vice President of Policy, released the following statement:
“Ensuring a stable provision of crude oil to refiners in the aftermath of national disasters or global supply disruptions is the purpose of our Strategic Petroleum Reserve. Today’s announcement that Energy Secretary Steven Chu has authorized a loan to maintain refining capacity along the Gulf Coast in the aftermath of Hurricane Issac represents an appropriate action by federal authorities. Regrettably, the Obama administration has previously shown a willingness to use SPR to achieve political ends, and to date the administration has not replenished the 30 million barrels released for such purposes last year.
The message from the Obama administration is clear — strategic reserves may be loaned under strict terms to refineries in the event of national disasters, but they may also be used to shore up President Obama’s approval ratings amid rising gasoline prices. While today’s announcement is appropriate, earlier administration actions with respect to our domestic oil resources — including but not limited to last year’s SPR release — reveal a disturbing trend: rather than an opportunity to promote energy independence and security, the White House appears to view America’s vast energy resources through the lens of pollsters and election advisors.”
Not trusting Obama is wise. I don't either. But recognizing this was an interruption in our nations oil supply, the purpose of having the SPR is important.
When not to tap the emergency oil reserve
http://articles.marketwatch.com/2012-08-31/commentary/33515967_1_oil-prices-release-more-oil-emergency-oil
A hurricane just blew through the Gulf Coast’s refinery row. Gasoline prices are up. It’s Labor Day weekend and it’s an election year.
Time to tap the Strategic Petroleum Reserve. Which is what has just happened.
The Energy Department announced Friday that it made an emergency loan to Marathon Petroleum Co. (US:MPC) The company, at its own request, is receiving 1 million barrels of crude from the nation’s emergency stockpile of 727 million barrels. Read more about the loan.
In this case, the transfer seems to be a perfectly rational move. Marathon’s Garyville, La.-based refinery is operating at reduced rates following Hurricane Isaac’s romp through the neighborhood. The problem appears to be getting crude to the plant, which is understandable given all the storm-related production and pipeline outages this week in Louisiana.
A small, timely loan from Uncle Sam can go a long way toward preventing a regional spike in fuel prices.
Let’s hope it ends there. But you never know. The temptation to release more oil must be enormous.
Every time gasoline prices get uncomfortably high — that discomfort level currently seems to be $4 a gallon — politicians get an itch to tap the SPR. Nothing buys votes like cheap gasoline.
Presidents who have ordered oil released from the SPR include George H.W. Bush (21 million barrels during Desert Storm), Bill Clinton (28 million barrels, and not in an emergency but as an opportunity for the government to cash in on rising oil prices); George W. Bush (11 million barrels in 2005 to calm the market after Hurricane Katrina); and Barack Obama (30 million barrels last year when the Arab Spring arrived in Libya).
The White House is reportedly reviewing plans to release more oil from the SPR should tensions suddenly flare up in the Middle East. That’s a legitimate concern, especially if a Western-led boycott of Iran triggers a genuine supply shortage.
What’s not as legitimate would be tapping the SPR for political gain.
There are differences between severe supply disruptions, economic relief and politically expediency. Sometimes they overlap. Emergency oil reserves need to be kept for true emergencies. Most folks know the difference.
But most folks also vote their pocketbook and could be coaxed into overlooking the difference, especially when tanking up for a three-day weekend. It’s exactly that kind of thinking that has a lot of people in the oil market speculating that the president is edging closer to a bigger SPR release.
The timing is totally wrong, though. Relief at the gas pump typically lasts only a few weeks, and it’s still two months until the election. Besides, the fallout from such an overtly political gesture could backfire big time, even if briefly popular with consumers
So don’t count on it. A million-barrel loan to a Louisiana refinery works just fine. Justifying any more requires a real emergency.
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It takes a few days to get everything back online even without major damage. Today, Sept 2nd, there is still production shut down.
BSEE Tropical Storm Isaac Activity Statistics: September 2, 2012
http://bsee.gov/BSEE-Newsroom/Press-Releases/2012/Press09022012.aspx
Based on data from offshore operator reports submitted as of 11:30 a.m. CDT today, personnel remain evacuated on a total of 131 production platforms, equivalent to 21.98 percent of the 596 manned platforms in the Gulf of Mexico. Production platforms are the structures located offshore from which oil and natural gas are produced. Unlike drilling rigs, which typically move from location to location, production facilities remain in the same location throughout a project’s duration
Personnel remain evacuated from 18 rigs, equivalent to 23.68 percent of the 76 rigs currently operating in the Gulf. Rigs can include several types of self-contained offshore drilling facilities including jackup rigs, submersibles and semisubmersibles.
As part of the evacuation process, personnel activate the applicable shut-in procedure, which can frequently be accomplished from a remote location. This involves closing the sub-surface safety valves located below the surface of the ocean floor to prevent the release of oil or gas. During previous hurricane seasons, the shut-in valves functioned 100 percent of the time, efficiently shutting in production from wells on the Outer Continental Shelf and protecting the marine and coastal environments. Shutting-in oil and gas production is a standard procedure conducted by industry for safety and environmental reasons.
From operator reports, it is estimated that approximately 71.50 percent of the current daily oil production in the Gulf of Mexico has been shut-in. It is also estimated that approximately 55.62 percent of the current daily natural gas production in the Gulf of Mexico has been shut-in. The production percentages are calculated using information submitted by offshore operators in daily reports. Shut-in production information included in these reports is based on the amount of oil and gas the operator expected to produce that day. The shut-in production figures therefore are estimates, which BSEE compares to historical production reports to ensure the estimates follow a logical pattern.
How big of a check did Marathon have to write to the DNC coffers?
sigh...
Read the rest of the thread. This loan of oil is an appropriate use of the SPR.
This government doesn’t do anything without strings attached.
You are right. They have to give back more barrels of oil than they borrow. Just like the 11 times when this was done before, including during President Bush’s administration.
Not saying it isn’t legitimate for SPR to do this, but I suspect Marathan had to grease somebody’s wheels to get it.
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