The Energy Department has authorized the release of some of its strategic oil supply to help Louisiana combat a significant fuel shortage brought on by Hurricane Ida.
The agency is releasing 1.5 million barrels of crude oil to ExxonMobil Baton Rouge as part of an exchange; the company will be responsible for replenishing the Strategic Petroleum Reserve.
The Strategic Petroleum Reserve, the world’s largest supply of emergency crude oil was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program. The federally-owned oil stocks are stored in huge underground salt caverns at four sites along the coastline of the Gulf of Mexico. Its sheer size makes it a significant deterrent to oil import cutoffs and a key tool in foreign policy.
Its primary purpose is to sell oil onto the market during times of economic hardship, but oil sales have only been authorized in 1991 during Operation Desert Storm, in 2005 after Hurricane Katrina and in 2011 due to disruptions in production caused by civil war in Libya.
The loan to Exxon is much more common, but usually reserved for major natural disasters. This is the ninth exchange authorized since 2002, and the seventh involving a hurricane. The last exchange was in response to Hurricane Harvey in 2017.
