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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

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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]

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  • (Score: 2) by JoeMerchant on Thursday May 25 2017, @12:27PM

    by JoeMerchant (3937) on Thursday May 25 2017, @12:27PM (#515409)

    So, more imaginary basis for value... nice.

    --
    🌻🌻 [google.com]