Former US Senator John Brieux of La. said in an interview today that President Bush should seriously consider releasing oil from the nation’s strategic reserve to compensate for the loss of supply because of Hurricane Katrina.

“The strategic reserve is intended to be used in emergencies,” said Brieux, “and this is certainly an emergency.” He pointed out that President Bush already declared federal emergency status for the affected regions yesterday.

The Strategic Petroleum Reserve is,

… the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 1973-74 oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.

Today’s events seem to meet the bill. According to the Energy Dept., “The SPR is now at its highest level” of inventory, with a total storage capacity of 727 million barrels. The SPR is not full, however; the SPR was expected to reach its goal of 700 million barrels this month.

Question: How fast can oil be released from the Reserve?

Answer: Should the President order an emergency sale of Strategic Reserve oil, DOE can conduct a competition, select offers, award contracts, and be prepared to begin deliveries of oil into the marketplace within 13 days. Oil can be pumped from the Reserve at a maximum rate of 4.4 million barrels per day for up to 90 days, then the drawdown rate begins to decline as storage caverns are emptied. At 1 million barrels per day, the Reserve can release oil into the market continuously for nearly a year and a half.

USA Today reports,

The Bush administration said Monday that it would consider loaning crude oil from the government’s emergency stockpile, if requested by U.S. refiners facing delayed shipments due to Hurricane Katrina.
“Certainly that option is on the table and it is a possibility based on what we have done in the past with other hurricanes,” an Energy Department spokesman said.

However, the Energy Department has not yet received a formal request for loans from the Strategic Petroleum Reserve (SPR), a crucial administrative step that starts the decision-making process, the spokesman said. …

The government loaned, or “exchanged,” some 5.4 million barrels of crude oil from the Strategic Petroleum Reserve last year following supply disruptions caused by Hurricane Ivan.

It’s too early to tell the scope of the disruption of supply Katrina will have caused. There was a reduction in pumping production of 600,000 barrels per day from offshore platforms as operating companies shut them down to evacuate crews. As well, Port Fourchon is reported underwater; it’s the major petroleum port in the United States. I think there will be some sales from the SPR and the announcement to that effect will be made within a couple of days.

Update: A lot of the nation’s refining capacity is in Louisiana, too. If there is significant damage to refineries there would be little point in releasing crude oil from the SPR if it can’t be refined.