US government, along with various other players seeking to lower oil prices. Can this actually be serious?
Setting the obvious political kneejerk and energy policy inconsistency aside, that’s kind of the whole point of an SPR, no? Fill it up when it’s cheap/abundant, use it as supply when it’s expensive/scarce.
OPEC+ can just elect to not do the next 400kbod increase and make the supply the same over the next 4 months. But at minimum you sell oil at $75 that you bought at $35 and signal that you care about the huddled masses to see if it helps your polls. And yeah, kudos to Trump group for filling the thing up at $35 oil.
Either way politics is dumb.
Poli is many. Tics are blood suckers.
A release of 50 million barrels to “lower” energy costs is really quite comical when you take into consideration that the US used 18.9 millions barrels of oil a day in 2020. They released 3 days worth of supply; it’s going to have no affect on energy pricing.
Here is a little history of the reserve since 2015. Since 2015, Congress has been selling the oil in the reserve to fund the deficit, in unpublicized sales. The U.S. Department of Energy has run seven sales since 2017, selling more than 60 million barrels, or about 8.6% of what had been in the reserve.
According to legislation already in place, the amount of oil in the reserve could fall to as little as 410 million barrels by 2028.
The legislation is summarized below:
The Bipartisan Budget Act (Section 404), enacted in 2015, includes authorization for funding an SPR modernization program to support improvements deemed necessary to preserve the long-term integrity and utility of SPR’s infrastructure by selling up to $2 billion worth of SPR crude oil in fiscal years 2017 through 2020. Although the estimated volumes presented in the chart above are based on an assumed oil price of $50 per barrel, the actual final sales volumes will depend on how SPR decides to allocate the sales volumes across those fiscal years and the actual price of crude oil at the time of the sales. For the Section 404 sales, SPR must get an appropriation from Congress to approve its requested sales revenue target.
Another section of the Bipartisan Budget Act (Section 403), enacted in 2015, mandates SPR crude oil sales for fiscal years 2018 through 2025 on a volumetric basis, rather than on a dollar basis, as specified in Section 404. The revenues from sales authorized under section 403 will be deposited into the general fund of the U.S. Department of the Treasury.
The Fixing America’s Surface Transportation Act, enacted in December 2015, calls for SPR sales totaling 66 million barrels from fiscal years 2023 through 2025.
The 21st Century Cures Act, enacted in December 2016, calls for the sale of 25 million barrels of SPR crude oil for fiscal years 2017 through 2019. The first portion of these sales is expected in late spring 2017.
In December 2016, the DOE announced it would begin the sale of 190 million barrels (30,000,000 m3) in January 2017.
The Tax Cuts and Jobs Act of 2017, enacted in December 2017, calls for the sale of 7 million barrels over the two-year period of FY 2026 through FY 2027.
The Bipartisan Budget Act of 2018, enacted in February 2018, calls for the sale of 30 million barrels over the four-year period of FY 2022 through FY 2025, 35 million barrels in FY 2026, and 35 million barrels in FY 2027.
Sleepy Joe could never have come up with the plan to use the SPR. The plan has the New Green Deal backers hands all over it. Plus, the price of oil hasn’t been truly affected. Also loved when Biden stood in front of the cameras and made the statement that the problem with high oil prices is lack of production. Other than Jimmy Carter’s, this “administration” is the most adept at shooting itself in the foot that I’ve seen in a long, long time!
A primary question I have is simply - how does one define the S? You know, as in “Strategic” Petroleum Reserve?
You can bet that only the shortest of site, self interested politician seeking to define “strategic” as lowering the price of $4/gal. gasoline to $3.95/gal. is the ‘strategy’ at play here.
How about defining strategic as being able to actually fuel our ships and aircraft when there’s a real emergency?
P.S. And, oh yea, when or if someone decides to re-fill what was sent to the marketplace, what’s going to be the price paid for such? (…or has the notion of actual cost totally evaporated in the print-all-you-want world?)
Jones4: don’t you know our ships & planes now run on wind & solar?
It used to be that wells produced less oil per day. New wells flowed for 30 to 42 months then production dropped. Production dropped again around 6 years.I’ve many wells that now produce 2 to 4 barrels a day after 40 years. Shale Oil has a different curve. It brings out most of the production in the first 18 to 24 months. The SPR was to protect us from an Arab embargo If we lost 4 million a day of Arab Oil, shale Oil can replace it as we draw from the SPR. We don’t need as much in the SPR.
Strategic Petroleum Reserve was created to cover imported oil volumes in the event of a cut-off or other emergency and prevent domestic shortage if military needs oil. Its website states that it holds 1,069 days of net imported oil volumes. I doubt the stored volumes would cover total military for very long needs without continuing domestic production. The announced draw-down is mostly political theater and includes 18 million bbls already sold to China and India. May not even happen considering today’s drop in oil price to below $70 due to new COVID mutation and travel restrictions. Here is link to Strategic Reserve website. Strategic Petroleum Reserve | Department of Energy