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U.S. Plan to Sell Oil Reserve Shows Declining Import Needs

posted by on Wednesday May 24 2017, @06:26PM   Printer-friendly
from the that-worked-out-just-fine-for-the-helium-reserves dept.

n1 writes:

President Donald Trump's proposal to sell half of the U.S. strategic oil reserve highlights a decline in the biggest oil user's reliance on imports - and a weaning off OPEC crude - as its domestic production soars.

The U.S. Strategic Petroleum Reserve (SPR) SPR-STK-T-EIA, the world's largest, holds about 688 million barrels of crude in heavily guarded underground caverns in Louisiana and Texas. Congress created it in 1975 after the Arab oil embargo caused fears of long-term spikes in motor fuel prices that would harm the U.S. economy.

The White House budget, delivered to Congress on Tuesday, proposes to start selling SPR oil in fiscal 2018, which begins on Oct. 1. Under the proposal, the sales would generate $500 million in the first year and gradually rise over the following years. A release of half the SPR over 10 years equals about 95,000 barrels per day (bpd), or 1 percent of current U.S. output.

Source: Reuters

Original Submission

 
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  • (Score: 2) by JoeMerchant on Thursday May 25 2017, @02:18AM (7 children)

    by JoeMerchant (3937) on Thursday May 25 2017, @02:18AM (#515243)

    That's not a band-aid, it's a classic pension raid.

    We don't really need the gold in Fort Knox, either, do we? Why not sell that too?

    --
    🌻🌻 [google.com]
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  • (Score: 2) by butthurt on Thursday May 25 2017, @03:20AM (1 child)

    by butthurt (6141) on Thursday May 25 2017, @03:20AM (#515262) Journal

    Some naively assume that if the gold is leased to commercial banks such as J.P. Morgan that the leasing bank backs up a truck and takes it away. That is not true. The gold can be leased in paper transactions without ever leaving Ft. Knox or West Point. The leased gold can then be rehypothecated by J.P. Morgan to other banks and so on until multiple parties all claim some title to the same physical gold. That gold goes on to support an even larger inverted pyramid of "paper gold" transactions in futures, options, forwards, swaps, and so-called unallocated storage. One reason not to do an audit is to avoid all of the awkward legal title questions that would arise once the physical existence issue was settled.

    -- https://web.archive.org/web/20160829005413/http://www.usnews.com/opinion/blogs/economic-intelligence/2012/06/04/calls-for-a-us-gold-audit-miss-the-point [archive.org]

  • (Score: 2) by fnj on Thursday May 25 2017, @01:11PM (2 children)

    by fnj (1654) on Thursday May 25 2017, @01:11PM (#515436)

    We don't really need the gold in Fort Knox, either, do we? Why not sell that too?

    I'll note in passing that there is more gold stored in the basement vault at the Federal Reserve Bank of New York than there is stored in the gold depository at Fort Knox. And the better part of it is stored there on behalf of foreign banks and governments. It is not even owned by the US

    • (Score: 2) by JoeMerchant on Thursday May 25 2017, @01:29PM (1 child)

      by JoeMerchant (3937) on Thursday May 25 2017, @01:29PM (#515447)

      Are you saying that the gold at Fort Knox is not owned by the US, or just the gold at the Federal Reserve Bank?

      Anyway, in order to sell the gold at the FRB, first we just have to declare war on the depositors, then seize their assets, then sell it to the highest bidder. Isn't it great how you can make money as Commander In Chief of the USA?

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      • (Score: 2) by fnj on Thursday May 25 2017, @01:49PM

        by fnj (1654) on Thursday May 25 2017, @01:49PM (#515453)

        I referred to the Federal Reserve Bank. Fort Knox is the official US gold reserve. Nobody even knows verifiably how much gold is in Fort Knox. Nobody is allowed to see it or audit it. Not even Congress. There are public tours [newyorkfed.org] of the repository at the Federal Reserve Bank. As of 2015, there was known to be 6350 tons of gold stored there. As of 2016, there was supposedly 4582 tons of gold stored at Fort Knox.

  • (Score: 1) by mayo2y on Thursday May 25 2017, @05:49PM (1 child)

    by mayo2y (6520) on Thursday May 25 2017, @05:49PM (#515580)

    This is not a pension raid. It's lying politicians and union leaders that are the cause of pension short falls (There should not be any deferred liabilities to pension funds etc...)

    This is something completely different. If we don't need to store this oil what should we do? Do nothing? Of course not. If we don't need it we should sell it.

    The money should be used productively - like paying down the debt. Of course this should be tied into not spending more than we have.

    • (Score: 2) by JoeMerchant on Thursday May 25 2017, @06:59PM

      by JoeMerchant (3937) on Thursday May 25 2017, @06:59PM (#515627)

      And the question becomes: do we need it or not?

      Should the US sell this oil now, while oil is still cheap and readily available?

      It would seem like a small win today, as compared to having a bigger win in the not so distant future when oil shoots up to 10x current prices due to under-supply / over-demand.

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