Posts Tagged ‘legislation’

That is the amount of oil the US government has “borrowed” from the Strategic Petroleum Reserve without replacing. At $80/bbl, that’s ~$28 billion worth of oil. Not refilling the SPR exposes the US to much greater costs, in terms of economic and national security risks. Those who were around during the 1970’s certainly remember the embargoes and the resulting disruptions that led to the establishment of the SPR.

The SPR has a fill rate of only 685,000 bopd, so a complete refill would require 518 days, which would have to be spread over years because of supply, operational, maintenance, and price considerations. The promised purchase of 3 million bbls in February never occurred, and we are now told that DOE “would like to start buying within the next year, depending on the window of opportunity.” This is not particularly encouraging, especially given that the mandatory sale of another 26 million bbls is upcoming this spring. So it looks like the SPR may be down another 20+ million barrels heading into 2024, an election year. Good luck making significant purchases then.

This is the hole we are in as a result of non-emergency SPR sales for price moderation purposes. Meanwhile, Congress has proposed the following legislation:

The last bill is interesting, but has little chance of passing and would be difficult to implement given other legislative, judicial, and administrative constraints on leasing and production. Having a plan is one thing; implementing it is quite something else.

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We now have yet another legislative proposal, this time from the House, that fails to address the fundamental offshore safety and regulatory policy issues.

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….. and oil prices fall by more that $10.  See how easy this is 🙂

Even if the legislation is passed by the Senate and enacted (unlikely), the only mandated sale outside of the Gulf of Mexico would be a small wedge in the Atlantic. This wedge would likely be reduced to a sliver by Defense Department concerns.

See our previous comments on this and the two companion House bills.

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