NEW YORK (CNN/Money) -
The federal government said Thursday it plans to loan out a limited amount of crude oil from the nation's strategic reserve in a bid to offset shortages caused by Hurricane Ivan.
The move comes less than six weeks ahead of the presidential election, and could help ease oil shortages and rising gasoline prices in Florida, Louisiana and other battleground states.
The Energy Department said it would negotiate with companies whose oil refineries were affected by the storm.
"I have authorized these negotiations in response to the physical disruption of offshore oil production and imports in the Gulf Region caused by Hurricane Ivan's destruction," said Energy Secretary Spencer Abraham in a statement.
The reserve, with about 670 million barrels of oil stored in underground salt caverns in Texas and Louisiana, was created by Congress in 1975 after the Mideast oil embargo, in a bid to protect American consumers against supply disruptions, including natural disasters.
The news came after oil markets closed in New York, but did send prices edging lower in after-hours trading.
Light crude for November delivery fell 21 cents to $48.25 a barrel in after-hours trading, after hitting $49, the highest in a month, during regular trading on the New York Mercantile Exchange. That was near the record trading high of $49.40 hit last month.
Earlier in the day a Congressional source told Reuters the loans from the reserve would be for two to three weeks. A separate source said the two emergency loans would be for 100,000 to 200,000 barrels and for 1 million to 2 million barrels.
Energy Department statistics released this week showed that crude oil inventories dropped by 11 million barrels in the Gulf region over the past three weeks.
The last time Washington loaned oil from the reserve was in late 2002, when Hurricane Lili disrupted shipments into Gulf Coast distribution hubs.
Department officials stressed that this was not a major withdrawal from the reserve, but rather a short-term loan for some companies that won't get deliveries for a week or two.
The department said the oil to be loaned would be returned after supply conditions return to normal.