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Senate Votes To Stop Filling Strategic Petroleum Reserve

by: robert.harding

Tue May 13, 2008 at 17:44:26 PM EDT

The Strategic Petroleum Reserve (SPR) can hold 727 million barrels of oil, according to an SPR factsheet. Currently, there are 702.7 million barrels of oil stored in the SPR. Today, the U.S. Senate made sure no more oil entered the SPR.

With an overwhelming 97 to 1 vote, the Senate voted to halt storing oil in the SPR in a way to increase supply and thus, lower the price.

What SA 4737 would do is as follows:

(a) In General.--Except as provided in subsection (b) and notwithstanding any other provision of law, during the period beginning on the date of enactment of this Act and ending on December 31, 2008--
(1) the Secretary of the Interior shall suspend acquisition of petroleum for the Strategic Petroleum Reserve through the royalty-in-kind program; and
(2) the Secretary of Energy shall suspend acquisition of petroleum for the Strategic Petroleum Reserve through any other acquisition method.
(b) Resumption.--Not earlier than 30 days after the date on which the President notifies Congress that the President has determined that the weighted average price of petroleum in the United States for the most recent 90-day period is $75 or less per barrel--
(1) the Secretary of the Interior may resume acquisition of petroleum for the Strategic Petroleum Reserve through the royalty-in-kind program; and
(2) the Secretary of Energy may resume acquisition of petroleum for the Strategic Petroleum Reserve through any other acquisition method.
(c) Existing Contracts.--In the case of any oil scheduled to be delivered to the Strategic Petroleum Reserve pursuant to a contract entered into by the Secretary of Energy prior to, and in effect on, the date of enactment of this Act, the Secretary shall, to the maximum extent practicable, negotiate a deferral of the delivery of the oil for a period of not less than 1 year, in accordance with procedures of the Department of Energy in effect on the date of enactment of this Act for deferrals of oil.

We have nearly maxed out our capacity with the SPR. It is nearly full and with prices as they are, we just cannot continue to do this at our expense.

If you are scoring at home, gas prices in New York are $3.896 today, according to Gas Buddy.

robert.harding :: Senate Votes To Stop Filling Strategic Petroleum Reserve

Tags: oil, Gas Prices, Senate, SPR, Crude Oil, United States, (All Tags)

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Senate Votes To Stop Filling Strategic Petroleum Reserve | 5 comments

Just saying... (0.00 / 0)

Isn't the strategic petroleum reserve a long-term national security consideration?

Like, ok. Say its 2045 or whatever and the world is running out of oil. America will still need oil for certain things, even if its just to use as ingredients in things: hard plastics, vitamins, food preservatives, spandex, dish soap and carpets.

Now, if America uses up all of its own oil now, and keeps no reserve, we will be entirely dependent upon other countries for oil. They'll be able to charge whatever they want and we'll have to pay. They'll have us over an oil barrel. Our only recourse to paying the prices will be to invade and take over their oil fields....and I don't think we need to get into why that's bad, duh. Or face life without hard plastic...no MRI machines, no cell phones, no microchips.

Conversely, If we're the last country with oil, we have no problems and are in fact in the role as kingmaker (although as a Democrat I would advocate for fairness in distribution).

Right?

by: Amherst Guy @ Wed May 14, 2008 at 01:53:11 AM UTC

We aren't using the oil in the SPR... (0.00 / 0)

All we are doing is we are going to stop filling it. There is a big difference there. The SPR is almost filled to capacity. There's plenty of oil in there already. But during this gas price hike, we have continued filling the SPR at a high rate (70,000 barrels per day). We will simply stop filling the SPR, which won't hurt the SPR but can help increase supply.

by: robert.harding @ Wed May 14, 2008 at 03:09:53 AM UTC

[ Parent ]

The strategic Petroleum Reserve has been filled (0.00 / 0)

to capacity before. A few times, actually. Then we expanded the capacity.

Long term thinking - we need oil later more than we need low prices now.

by: Amherst Guy @ Wed May 14, 2008 at 03:17:21 AM UTC

[ Parent ]

It's not about filling it to capacity... (0.00 / 0)

We can talk about this all night, but oil is a finite resource. I know you say we need oil for later, but we really don't. We need the alternatives to step up and replace oil and that needs to happen now.

We have become dependent on ALL oil, whether it's foreign or domestic. Filling the SPR does nothing. With 702 million barrels, we would ration that to last half a year.

This addiction to oil will only hurt us in the long run.

by: robert.harding @ Wed May 14, 2008 at 03:47:23 AM UTC

[ Parent ]

The SPR is a silly concept (0.00 / 0)

In the long run, 702 million barrels is not a significant enough amount to help the U.S. weather any sort of long-term oil supply crisis. Whether or not it's filled to capacity, or if capacity is increased, is largely irrelevant, as the overall reserves will not be substantial enough to cushion the energy market from the negative effects of a long term supply shock. Storing a significant amount of reserves would have only been possible when oil prices were significantly lower than they are (1998-2001 may have been an ideal period). Of course, our current situation is, in fact, effectively a long term supply shock to the energy market in the U.S. The SPR always made more sense (and I thought this was its purpose) as a cushion for a potential short term supply shock, allowing the country to sustain its energy needs until petroleum supplies return to normality. What we are seeing today is not such a market fluctuation or extenuating geopolitical circumstance, but a trend which is only going to continue in the foreseeable future.

Suspending the rather small flow of petroleum stored daily in the SPR is a token political gesture that will have a negligible effect on overall supply, and therefore overall cost of gasoline. The overall amount stored daily is a drop in a very large bucket. Yet, SPR storage suspension also doesn't seem to undermine future national security in any significant way, meaning the token gesture seems largely harmless.

by: Klugstah @ Wed May 14, 2008 at 12:23:28 PM UTC

[ Parent ]