Topline
After President Joe Biden declared Thursday that the federal government would use all its tools to address a severe fuel shortage in Louisiana after Hurricane Ida, the Energy Department authorized the release of some strategic oil supplies for the first time in four-years.
President Joe Biden discusses Hurricane Ida's response during an event at the South Court... [+] Auditorium, White House campus on Thursday. (AP Photo/Evan Vucci) ASSOCIATED PRESS
The Key Facts
According to the Energy Department, ExxonMobil Baton Rouge will receive 1.5 million barrels crude oil as part of an exchange. This means that the company will have to replenish the Strategic Petroleum Reserve. Many Louisiana oil refineries have been forced to stop production because of power outages and Hurricane Ida damage. The few remaining online are also dealing with an unusually low supply of oil from Gulf of Mexico. The Energy Department reports that 80% of the Gulf's oil production has stopped, as well as 83% of natural gas production. A lack of online refineries and widespread power outages have caused a severe shortage of gasoline in Louisiana. Many people rely on it to power their generators. GasBuddy reports that more than 65% of New Orleans and Baton Rouge gas stations were without fuel on Thursday.
Important Quote
According to the Energy Department, tapping into the Reserve will "assist with any logistical problems of moving crude oil in areas affected by Hurricane Ida and ensure that the region has fuel access as soon as possible to continue their recovery."
Important Background
The largest oil reserve in the world is the Strategic Petroleum Reserve. It holds 621.3 million barrels as of August 20. This oil is held in two Texas facilities and two Louisiana underground facilities. The 1973 OPEC oil embargo against countries that supported Israel in Yom Kippur War led to a severe shortage of oil in the United States, which caused oil prices to soar. Although the Reserve's primary function is to sell oil onto markets during economic hardship, oil sales have been authorized only three times: in 1991 during Operation Desert Storm and 2005 after Hurricane Katrina. In 2011 oil sales were also restricted due to production disruptions caused by civil war in Libya. The agreement, which is essentially a loan to private companies, was signed Thursday. However, this type of loan is more common and reserved for major natural catastrophes. This is the ninth authorized exchange since 2002 and the seventh that involved a hurricane. In 2017, Hurricane Harvey prompted the last exchange.
Surprising Fact
It appears that the fuel shortage is largely localized and has not had any major impact on oil supplies to the U.S. overall. This is a far different story from what happened after Hurricane Katrina when gas prices soared by 45c per gallon.
Big Number
More than 900,000. According to the Louisiana Public Service Commission (including more than 87% of New Orleans), this is how many Louisiana customers are still without power.
Continue reading
Louisiana is facing a critical fuel shortage, further threatening power supply (Forbes).
New Orleans Recovers Partially Power after Hurricane Ida, but Full Return could Take Weeks or More (Forbes).
