Last week sustainablog asked what your government was doing about peak oil. With all the layers of government to which I am subjected, I immediately thought to myself that there is no short answer. Now, at the very least, I have a partial answer:  My federal government is preparing for peak oil by topping off the tanks of the nation’s strategic petroleum reserve.

The U.S. Department of Energy today announced that it plans to take advantage of the recent decline in crude oil prices, and will purchase approximately 12 million barrels of crude oil for the nation’s Strategic Petroleum Reserve (SPR) to replenish supplies sold following hurricanes Katrina and Rita in 2005.

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Last week, Hurricane Ike left many US oil refineries hobbled in its wake — including the nation’s largest biodiesel refinery. As a result, oil production is down.

Demand for ethanol in the US is closely tied to oil production because of the federal ethanol-gasoline blending mandate. So as oil production has fallen, so has ethanol demand.

At the same time as Hurricane Ike was downing oil refineries, corn futures — essentially the betting on whether or not the price of corn will rise or fall in the coming months — have risen dramatically due to the volatile financial markets and a general upward trend.

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After raining all day on September 13 and 14, the Windy City became the flooded city.  The far-reaching tendrils of the hurricane dumped 9 inches of rain in less than 24 hours.  Roads and basements became water logged.  The Chicago River overflowed in some parts, leading to the evacuation of about 300 homes.  Flooding in Northwest Indiana led to the closure of Interstate 90.

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The GreenHunter facility is capable of producing 100 million gallons of biodiesel per year (Mgy) using a combination of animal fats and vegetable oils. Prior to Hurricane Ike, they had been ramping up production and last Friday announced that they had achieved a 65 Mgy output. It’s unclear how the hurricane damage will affect their time frame for reaching full capacity.

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As the result of the disruption in the supply of fuel first caused by Hurricane Gustav, and now by Hurricane Ike, the U.S. Environmental Protection Agency (EPA) is waiving certain special diesel fuel requirements that apply only in the state of Texas.

Responding to a state request received Sunday, EPA will allow the suspension of the Texas Low Emission Diesel (TxLED) requirements until Sept. 30, 2008. Federal regulations for Ultra Low Sulfur Diesel (ULSD) fuel with a maximum sulfur content of 15 parts per million must, however, still be met.

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As Ike closes in, drilling platforms in the gulf have been evacuated, refineries closed and now the Port of Houston is closed. MSNBC reports:

Exxon Mobil, Valero Energy, ConocoPhillips and Marathon Oil are among the companies halting operations as the storm closed in. Refineries on the upper Texas coast account for one-fifth of U.S. refining capacity.

In the week prior to landfall the energy and economic impact of Ike began to occur as drilling platforms, oil refineries and chemical plants all ceased operating in preparation for the storm. The Port of Houston is the 2nd largest port in the U.S. and is scheduled to remain closed until Monday. Also halting operation is the Dow Chemical Freeport Complex, which holds 75 chemical plants and produces approximately 27 billion pounds of chemical/chemical products annually. Dow Chemical is closing their 139 acre plant in La Porte as well.

Meanwhile on the east coast a large gas station chain with 1,600 stores spread over 11 states has asked customers to limit their gas purchases to 10 gallons each with signs posted at their stations. Based in Sanford, NC The Pantry includes Kangaroo and Petro Express stations. According to the Chicago Tribune, The Pantry has stores in Kentucky, Virginia, Georgia, Florida, Mississippi, Alabama, Louisiana, the Carolinas and Indiana.

The Charlotte Observer reports about The Pantry and their gas rationing signs:

CEO Pete Sodini said the move was precautionary and caused by a large spike in the price of wholesale gasoline and the shutdown of several refineries in the Gulf of Mexico. There was no shortage of gasoline Thursday.

Mr. Sodini went on to say the ration signs were meant to avoid panic buying which could deplete the gas supply unnecessarily in the area. Explaining that if everyone rushes to gas staions and fills up every vehicle in their prospective household, gas supply will run out temporarily.

Sodini said he’s aware that some people might accuse him of creating a panic, but added, “they’ve got to tell me how I win by doing this. … We sacrificed a lot of volume today.”

The Post and Courier Charleston states the signs “did not help” and only succeeded in promoting mild panic as people called, sent text messages and sparked rumors of gas prices and supply. The Post and Courier artcile tells of stations and ration signs in the Carolina’s. This was also happening in Tennessee as I personally received a phone call from a friend in Franklin, Tennessee about a sign posted at a gas station limiting gas purchases to 10 gallons per person.

Energy and Economic impact will take a back seat to the people who will undoubtedly experience the repercussions of Ike’s brutal force. As the hours and days move forward and the aftermath assessed, the long term impact across the country will be discussed again and again. Revisiting offshore drilling, energy independence, our current dependence on foreign oil, alternative energy options and the important election that can influence all of these issues long term.

Related Posts:

• Hurricane Gustav Spurs EPA to Temporarily Waive Clean Air Act Gasoline Requirements for Part of Texas
• Gas Hole the Movie: History of Oil Prices and Alternative Energy
• US Will Export $440 Billion for Oil in 2008

Photo Credit: Troy Burwell via Flickr Creative Commons License