In case you’re puzzled about the timing of what sounds like a huge sale of oil from the Strategic Petroleum Reserve (SPR)—8 million barrels of light sweet crude—there are a few things that might put to rest any conspiracy theories you might entertain…before you tell your friends they’re doing it to mess with the Organization of Petroleum Exporting Countries (OPEC).
First and foremost, it’s not that much. 8 million barrels should fetch a nice cash infusion, but it’s barely a drop in the SPR’s bucket. And more importantly, this wasn’t done on a whim. Here’s why it’s happening, and it’s a pretty logical explanation from the Department of Energy (DOE):
On December 10, 2016, a Continuing Resolution was enacted into law that included a provision to allow the DOE to sell up to $375.4 million in crude oil from the SPR, the first tranche of oil sales designed to fund operational improvements necessary to ensure the long-term integrity of SPR infrastructure assets as part of the SPR Modernization program.
It was the Bipartisan Budget Act of 2015 that included authorization for funding an SPR Modernization program through the sale of up to $2 billion worth of SPR crude oil over four consecutive fiscal years, commencing in fiscal year 2017.
The oil is made available to multiple buyers. Any company registered in the SPR’s Crude Oil Sales Offer Program is eligible to participate in SPR crude oil sales. Companies may register by going to http://www.spr.doe.gov and then following the instructions for registering.
With an inventory of approximately 695 million barrels, the SPR remains the world’s largest supply of emergency crude oil. The federally owned oil stocks are stored in underground salt caverns at four storage sites in Texas and Louisiana. And for those of you who are wondering…the SPR was begun in 1975.
Do you remember why?