The U.S. Department of Energy has authorized Exxon Mobil Corp. to receive crude from the Strategic Petroleum Reserve to kickstart the production of fuels while most oil production in the Gulf of Mexico remains shut.
The oil company will be getting 1.5 million barrels of DOE-supplied oil for its Baton Rouge refinery, the DOE said. Similar to a loan, the agency will provide crude oil to Exxon to meet an immediate need and the company will restock the same amount of oil plus premium barrels within two to three months, according to a statement.
President Joe Biden earlier Thursday said the U.S. would use all the tools at its disposal to increase the availability of gasoline and ease pressure on prices at the pump. Exxon is among fuel producers that had to shut their plants in Louisiana as Ida roared ashore Sunday. The storm caused widespread damage to oil infrastructure and the state’s electricity grid. With most of the Gulf of Mexico’s output still offline, gasoline prices are expected to be at the highest in seven years going into the Labor Day weekend.
About 12% of the nation’s crude processing capacity was shut or reduced ahead of Hurricane Ida. The refineries are slowly trying to restart as power is restored but securing crude supplies is also difficult with widespread damage to oil infrastructure. More than 93 percent of oil production is still shut in the Gulf of Mexico, according to the Bureau of Safety and Environmental Enforcement.
The U.S. average for regular unleaded rose about 1 cent Thursday to $3.18 a gallon and is approaching the summer high of $3.19 set in early August, which would make it the most expensive Labor Day holiday weekend for U.S. motorists since 2014.
In an email on Wednesday, Exxon said the Baton Rouge refinery has begun restarting its units, which were shut ahead of Ida slamming into south Louisiana Sunday.