http://www.washingtonexaminer.com/house-temporary-spending-bill-requires-sale-of-350-million-from-strategic-petroleum-reserve/article/2648233
A stopgap government funding bill expected to be approved by the
House Tuesday contains language that orders the Energy Department to
sell $350 million from the Strategic Petroleum Reserve.
Congress recently has frequently used the strategic oil reserve, an emergency fund, for deficit reduction and other items.
Under the Obama administration, Congress passed laws
mandating the Energy Department sell about 140 million barrels of oil
from the Strategic Petroleum Reserve to pay for deficit reduction, drug
research and highway spending.
President Trump's 2018 budget proposal called for a further drawdown of the oil reserve,
seeking to sell about half of it, 270 million barrels, over the next
decade to cut the deficit by $16.6 billion. That budget was never
implemented.
The recently passed tax legislation also calls for sales from the reserve in 2026 and 2027.
Congress created the Strategic Petroleum Oil Reserve 40 years ago as a
response to the Arab oil embargo, as the U.S. faced an economically
threatening disruption in oil supply. Oil in the reserve is stored in
four underground sites along the coastline of the Gulf of Mexico.
It is intended to shield against global supply disruptions, which is
less problematic for the U.S. now because it is not as dependent on
Middle Eastern suppliers, with domestic oil production surging in recent
years.
Still, the U.S. is still a net importer of crude oil.
As of February, the reserve had 665 million barrels of crude, and the Energy Department made use of the petroleum reserve during last year’s hurricane season.
In September, the agency released 1 million barrels of oil from the
Strategic Petroleum Reserve to Phillip 66's Lake Charles refinery in
Louisiana, as Hurricane Harvey barreled through the Gulf Coast, causing a
surge in gasoline prices.
It
later released an additional 3.5 million barrels from the reserve to
large refineries owned by Marathon Petroleum Corporation and Valero.
The Harvey-induced emergency releases of oil were rare, and were the first since 2012.
But experts say Harvey highlights the continued importance of the oil
reserve, even in an era where the U.S. produces more of its own oil
from fracking, and relies less on imports.
The oil, they note, was bought at much higher prices than the Energy
Department could sell it for today, with prices below $70 a barrel.
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