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Strategic Petroleum Reserve No Longer Key Part Of US National Security
Submitted by Nick Cunningham via OilPrice.com,
The U.S. Strategic Petroleum Reserve (SPR), once seen as a cornerstone of America’s energy security, is losing its shine in Washington.
The SPR was established in the aftermath of the 1973-1974 oil embargo, which led to high gasoline prices, fuel rationing, price controls, and long lines at gas stations. The U.S. government decided to stockpile oil in salt caverns in Texas and Louisiana, fuel that could be used in the event of a supply outage. Today, the SPR holds 695 million barrels of oil.
In the decades since, oil from the SPR has only been released a handful of times – including the Persian Gulf War in 1990-1991, Hurricane Katrina in 2005, and during the Arab Spring in 2011.
Sales from the SPR have often undergone quite a bit of scrutiny in the U.S. Congress. It is seen as a stockpile only to be tapped as a last resort measure, with the intention to supply the market only when there is a short-term disruption in supply (as in the examples mentioned above). Even the 2011 sale from the SPR was met with harsh criticism from certain members of Congress, who argued that the petroleum release was not needed.
When President Barack Obama announced the sale of 30 million barrels following turmoil in Libya that knocked supplies offline and raised oil prices, Republicans were incensed. “But by tapping the Strategic Petroleum Reserve, the President is using a national security instrument to address his domestic political problems. The SPR was created to mitigate sudden supply disruptions. This action threatens our ability to respond to a genuine national security crisis and means we must ultimately find the resources to replenish the reserve – at significant cost to taxpayers,” House Speaker John Boehner said in a statement in June 2011.
However, times have changed, apparently. The U.S. Senate reportedly reached a bipartisan agreement this week on a long-term transportation bill that would fund the nation’s highways and transit systems. The problem with transportation legislation is that much of the funding comes from the federal gasoline tax, which, standing at 18.4 cents per gallon, has gone unchanged in over two decades. A combination of inflation and more fuel efficient cars means that the 18.4 cents per gallon tax does not go as far in funding transportation projects as it once did.
But with Congress unwilling to raise the gas tax, they are hunting for other sources of revenue to fund the six-year transportation bill. As a result, they have resorted to raiding the SPR. The bipartisan bill reportedly calls for the sale of 101 million barrels of oil from the SPR between 2018 and 2025.
Although it is unclear if the bill will pass, what is interesting about the move is that the Senate has shed any pretense of national security with the move to sell off crude from the SPR. In 2011, President Obama ostensibly sold off oil in order to supply a disrupted market. His critics argued that it was a cynical political move intended to reduce the price of oil rather than make up for any physical shortage of actual crude oil on the market. But still, the White House argued it was needed.
Now the Senate isn’t even pretending to be pursuing any energy security objectives. The call for the sale of 101 million barrels is being pursued because it will raise an estimated $9 billion for transportation projects. Rather than do what many economists think need to be done – raise the gasoline tax – the Senate has instead decided to abandon a bulwark of U.S. energy security policy put in place four decades ago.
The top Senator on energy issues, Lisa Murkowski (R-AK), admonished her Senate colleagues for dipping into the SPR for an unrelated funding purpose. “The Strategic Petroleum Reserve is a vital national security asset that must be maintained in case of serious future supply disruptions,” Murkowski said in a July 21 statement. “While I recognize that a long-term highway bill is a priority, a shortsighted sale that undermines our emergency preparedness could have real and lasting impacts on our security. On the merits and in its timing, this is simply the wrong approach.”
Of course, maybe the Senate is not off base. Maybe the SPR is no longer needed the way it once was. Even though it is not at capacity, the SPR held 106 days’ worth of oil supply as of May 2014, well above the 90-day supply that the U.S. has pledged to safeguard as a member of the International Energy Agency. And after considering the fact that the private sector holds even more in storage, it could be argued that the U.S. has excess supply sitting on the sidelines, way more than it needs for supply disruptions. That presents an opportunity to downsize the SPR, and in the meantime, use the proceeds for other purposes.
However, there are a variety of reasons why the government should think twice before dismantling or downsizing the SPR. For example, the shale revolution that has cut oil imports may not last over the long-term. Moreover, the U.S. will not be immune to supply disruptions just because it does not import as much oil as it once did.
Still, those arguments are apparently not as potent on Capitol Hill as they once were. As little as four years ago, the President was being accused of undermining U.S. national security by selling SPR oil in order to soften oil prices, which, if true, was at least related to the mission of the SPR. Now, with even less fanfare, a bipartisan group in Congress no longer seems to mind deviating from the mission, and instead seeks to simply sell SPR oil for cash.
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In my country there is problem...and that problem is transport....
-Borat like english barry.
Oil today. 401ks tomorrow. Start stackin.
They're never going to sell and close down the SPR. Shit, we still stockpile Helium since the 1930s when Zeppelins cruised through the air and the Emprire State building was designed to dock a blimp at the top.
No, I'm not shitting you.
So, if this is new information to you, what do you think that says about the future of the SPR? Just because we don't need something any more doesn't mean the government will divest itself of it.
Politician is all consume of strategic petroleum jelly reserve.
I'm getting all verklempt. Here's a topic to discuss, the Strategic Petroleum Reserve is neither strategic, nor a petroleum reserve....
Discuss....
Pump it out of the ground in ND, pipe it to TX ans LA and pump it back into the ground. Sounds about right...government efficiency at its finest.
Helium is still use for coolant and is for party balloon. National Helium Reserve is prudent government function.
My kids love it when I sing the munchkin Lollipop Guild song from Wizard of Oz with lungs full of helium I suck out of their party balloons. -Following the Yellow Brick Road, now with reduced tolls.
Your kids are truly blessed. I had forgottten the profundity of said scene so was compelled to Google youtube to refresh my memory.
https://www.youtube.com/watch?v=6KSiyaqnZYs
helium is also used in a large number of industrial processes since its an inert gas and is also the smallest molecule. also works a s super fluid.
We used it to leak check stainless steel source capsules after welding for just that reason.
https://en.wikipedia.org/wiki/Helium#Applications
not in a big hurry to have them dismantle that, helium reserves are just as strategic...
Oil has a few thousand applications of it's own, too.
I want to ask you a question.
You honestly believe anything those fuckups say regarding anything they say they have as a strategic anything? Why would there be any reason to believe any of them?
is there a relevant point to that question? the fact of the matter is, helium isn't nearly as easy to come by as oil and has many uses, many of them highly technical and strategic in nature...
I see a lot of bitching and moaning on this forum but not a lot of thinking... I get downvoted because the original premise that helium reserves are useless was easily rebutted, and in retort I get stupid fucking questions like this...
there's a part of me that wonders why I waste my time here, honestly... most people can't look past their own noses when planning ahead and are all too ready to prove it... if this site isn't proof of that nothing is...
regardless of who I believe one way or the other, the fact of the matter is that helium is a scarce strategic resource and it's fairly prudent to have some in reserve when much of your high end tech (especially medical and superconducting in this case) depends on it... after that I don't give a flying rat's ass about who's a fuckup or whether or not I should believe them... we're talking about a goddamned _bill_ for chrissakes, it's not law of the land and like most crank bullshit that those dumbfucks try to put in as a rider, it will get shot down...
somewhere along the line, a few of those clueless fuckups actually got something right and decided to protect us as best as they could do at the time from strategic resource depletion... I have to wonder in my heart of hearts why everyone here treats this as a bad thing... seriously, what do we want them to do, say fuck it and let it burn? need I remind everyone that NO ONE in D.C. was voted in on such a platform, if such even existed?
seriously guys, go outside and breathe some fresh air and look at the sun and enjoy life for a change... not everything is a deep nefarious plot and, although people may be out to get you, they aren't ALL out to get you...
The comments at reason.com make these guys look good by comparison.
Helium will always be stored, because it's likely the first element to go officially extinct in our atmosphere.
Thanks for reminding me of the blimp dock on the Empire State Building. When I was a boy in the 1940s, we all knew about the blimp dock. I hadn't thought about it in 60 years.
Origin or the word blimp? Civilian airplane spotters in world war two (Civil Air Patrol, CAP) had check sheets to note each and every piece of equipment spotted in the air. The designation 'blimp' was the acronym for 'Balloon: limp' versus helium ships with ridgid frames which were designated 'Balloon: rigid'.
Further note: Lee Oswald was a member of the Civil Air Patrol. David Ferrie was his patrol unit's leader.
What are you going to buy with it if there's no oil to deliver anything? You honestly think that anyone is going to pay attention to a man with shiny rocks claiming that they are wealthy? No man...you'll be walking like everyone else.
THROW THEM DOWN THE WELL!!!!
Of course our wise government chooses to sell assets when they are priced at decade lows. When oil gets up to $200 a barrell they will be falling all over themselves to replensih the SPR.
These are bureaucrats, not traders.
They are tapping into it in case Texas wants to ceceed, to make it harder for them lol
Who bought the senate?
Who didn't?
If you remember, Bush also dumped from the SPR at the lows in 2009. That after filling it all the way up to 140. Someone is getting paid. That is all.
sell it all, crush the oil even more! MOAR!
Selling 101 million barrels at $50/barrel gives them $5.05 billion dollars to put into the highway trust fund.
We've already spent over a trillion on the JSF.
Scrap that craptastic plane and you can fund the Highway bill for a long time.
There are some stupid mother fuckers running this country. Fill the reserve at $148 a barrel and sell it a $50. Our retarded crony government at work. I try hard not to let hate creep in my heart, but these assholes make it increasingly difficult to do so.
I wondered where Gordon Brown went.
+1 Lol.... now there's a gold expert.
Gordon Brown, former British Exchequer is sell Gold early 2000s below $US 300/troy oz. England is screw, but is not overnight, is take 100 year for decline, now is just humorous anecdote.
I gave up, I hate every one of them
The reason the hate hasn't crept into your heart yet, is that you still assume they are dumb. They aren't. This is just another example of privatizing profit and socializing loss.
I assume nothing. I know that they are dumb even though they are doing what they seem to think is smart. My belief is if they were smart they would take the long term view of what's best for the country not what's best for them.
You should check your facts. The average cost of the oil in the reserve is about $29/bbl. It was bought a long time ago. It's probably not any good anymore either. You can't store oil indefinitely once it's been pumped out of the ground and I don't think the SPR produces very good oil.
"You can't store oil indefinitely once it's been pumped out of the ground and I don't think the SPR produces very good oil."
Incorrect. Oil can be stored indefinately if done properly. Bush Jr filled it back up between 2001 and 2008:
https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States)
Better start breeding donkeys cause that's what they ride in Banana Republics.
There's an immediate shortage of milk goats.
They can't raise the gas tax and survive politically, so they need something stupid and easy that the sheep won't know or care about....
Imagine how much they could grab with a .05% pinch from all 401ks over $150,000. And people are worried about them confiscating gold....
They won't do that.No need.
What they will do is: only a little cash out, and a compulsory purchase annuity funded by USTs for
the balace.Relieves the FedRes of their toxic bonds as well.
Same system they use in the UK.The CPA only gets 1/3 of the income of an open market one.
I got a rude surprise when I vested one out.
So they trap the money . capture the growth and then tax the reduced annuity.
1-2-3 and you're fucked.
Right, I didn't mean they'd simply steal it outright. The whole point of banking in this new world is to steal from people (now people's kids) right out from under their noses without them being any the wiser.
They will also likely increase the tax rates in the future, and probably implement a special tax on withdraws at some point.
Bad idea to put money into "tax deferred" accounts. For Most people 401K have been increased taxation since most are forced to withdraw money for one reason or another and get slapped with the taxes and the 10% penalty on early witthdraw. Its nothing more than a sham.
i'm not using stinky 40 year old oil.
+1.......Lol.......... if it's not aged like a fine wine over a few hundred million years I don't want anything to do with it.
Wow! Tough crowd.
don't take it personally, there's some humorless folk roaming these parts...
Sta-Bil fuel stabilizer. Works in i a jif, pretty sure they poured a couple bottles in.
I get nervous when we dip into the strategic ketchup reserves in the basement.
Why feed the infrastruture, it only feeds the centralization of the State's power?
Maybe throw in a sale/lease back on the Capital building. And the Rino's wonder why people are flocking to Trump.
To salty for me...
I wouldn't be surprised if the SPR is already empty. Think about it: where did the oil come from that helped push the price below $50/barrel? Ah ha!
The old Fort Knox story?
My guess is that it wasn't supply related, just our friendly neighborhood central bankers.
http://pebblewriter.com/what-oils-slippery-slope-really-means/
They are filling the reserves up for the fun and games that are going to start in September.
Who needs oil when you have Tesla? Power comes from wall.
It's only about 46 days of supply for the US at "non-rationed" usage rates. Not much of a reserve really. They need to triple its size to make it even remotely worth while.
If there comes a time when the reserve needs tapped, it won't be business as usual in the U.S and demand will go down.
And, odds are we'd just attack/invade whoever's creating the need to tap it.
Drawdown maintenance costs.
The Strategic Petroleum Reserve'sDrawdown Readiness - U.S. ...
Like the Gold who can verify the SPR?
Exactly! Show me the physical oil.
I still chuckle whenever I see world gold holdings by country and see that overly large number attributed to the US, as if it hasnt already been transferred to banksters
Obama will dump SPR to lower cost of gasoline, just before elections to grab DNC Hillary voters.
The proposed sale of the SPR of around 14% of its contents just revealed that the USA has no gold. After all if they sold just 250 tonnes or just 3% of the supposed 8000 tonnes of gold they have, they could raise just as much.
Why not throw the members of both houses into the SPR? Frightened you might contaminate it?
When you bomb with drones, you don't need so much oil/fuel.
This article's title is a complete red herring and the argument is idiotic. They're going to sell a tiny fraction of the SPR to maintain the decrepit highways ... which were constructred for ... national security purposes (but then quickly and conveniently repurposed into a place for the dumbest people of all time to subsidize the useless auto industry and convert the most valuable resource of all time into atmospheric pollution for absolutely no benefit to themselves).
Rather than getting rid of the cars and killing about 100 birds with 1 stone, they are going to sell oil, which will promptly be burned for nothing, at historically low prices... just so dumbass Americans can continue to ... use highways ... to burn oil for absolutely nothing.
You could not make this shit up.
How do you get rid of all the cars?
Why not sell one of our islands or two, maybe the outer banks or Nantucket and include all the politicians? Wait, that would be a deal killer, forget the politicians.
Washington D.C. Bankster politicians stole the gold now they steal the oil and coal and then they are going to kill us.
I'm sure the SPR has been rehypothecated many times over already.
"What else can I do to Fuck Up the US, Reggie?"
"How about that oil reserve thing? Sell it off, or let it leak out."
"Graet idea! The Armed Force will have no reserve fuel. I've got a hard on!"
"I'll be right there, Munchkins!"
Don't know whether the oil is still any good or not, but the value probably isn't going up anytime soon.
http://pebblewriter.com/what-oils-slippery-slope-really-means/
That always was a Military oil reserve. Anyone who thought it was for Joe Schmo in hard times is retarded.
Selling off the SPR at the bottom of the oil market is pure lunacy. Let me correct myself selling off the SPR under any circumstance is pure lunacy. Its there for strategic and event crisis mgmt. Its a buffer against oil price extortion.
My lord these congress critters are beyond reason
The Energy sector will be a major victim of the current future financial course. Record profits of the recent past in some areas will no longer be the new normal. The current financial future will see loss of financing. This will have a negative cascading effect on the portions of the business that drive things revenue, growth, supply and demand. Potential new sources of existing of financing will also dry up or vanish as they are squeezed into more conservative investments in order to not lose principal.
http://www.bloomberg.com/news/articles/2015-02-02/credit-challenged-dril...
http://examiner-enterprise.com/news/state/investors-keep-funding-oil-nat...
The Energy sector works with and impacts so many inter-related businesses. Everything from exploration, engineering, suppliers of equipment or manufacturing of products like automobiles and too many others to list. They will all be directly or indirectly hurt by this current course as well.
www.zerohedge.com/news/2015-07-22/will-oil-patch-bust-trigger-recession
It is like the inter-related global economy. One large enough hit to one piece of the inter-connected puzzle could be the trigger to drive others in the same direction. The consequences of of the current course has the very real possibility to be disastrous for everyone globally.
I've had the pleasure of meeting a number of Energy sector employees over the years. Especially lately. You, like your peers in other industries, will need to decide to stay the current financial course or assist making a needed change. Enron and their eventual end were a microcosm of where things are headed on the current financial path.
If anyone that may have followed my posts that are in the Energy Sector you may have noticed a very detailed old post, now gone, that showed my applied skills and abilities to effectively assess a number diverse factors and tie them together. Here is an example but I will not go back into too much detail. Another event occurred just today that confirmed and continues to reinforce my analysis long ago. As I've mentioned before the accuracy of my individual analysis has significantly improved over time. A Universal solution however is exceptionally more complex and will require the commitment and dedication of many. So success is not guaranteed. However, I know I would not like to see the results at the end of this current path. Do you? And, if not, what will you do to help change that course?
The U.S. Strategic Petroleum Reserve (SPR), once seen as a cornerstone of America’s energy security, is losing its shine in Washington
The only shine Washington should lose is the sitting president
and Congress while you're at it. RESET
101 barrels from 2018-2025. The US uses 20 million barrels a day.
The reason we are selling the SPR is cause we have a new reserve.
Our current SPR = IRAQ.
Our future SPR = IRAN.
A combination of inflation and more fuel efficient cars means that the 18.4 cents per gallon tax does not go as far in funding transportation projects as it once did.
Notice, no mention of how many more vehicles there are on the road now paying that tax ... and where the marginal cost of repairs and improvements is way less than the original cost of acquiring and clearing and preparing the right-of-way roadbed.
Hard to believe the 'thuglicans don't want to raise a good, eat the poor, regressive as hell, tax like gasoline consumption. They really don't want any revenue at all, do they? All that social security cash sloshing around the national higways and Wal-marts. Those construction programs must really be good income redistribution tools.
Ah, the good ol buy high n sell low trick.
Can't lose.