[Cog]

That is not the purpose of selling off part of the SPR. Wapo is fake news. People who quote them have an agenda.

[ROCKMAN]

Revi - A couple of relevant points. Despite the slogan the SPR provides nothing in the way of "energy independence" even in the short term. The US imports 300 million bbls per month. The SPR would struggle to deliver 4.4 million bbls per day posted rate..about 40% of our imports. So if we continually drained the SPR it would have no meaning impact on our "independence": we would still be dependent on 170 million bbls of oil imports per month.

And that irrelevant action would NEVER HAPPEN...the DoD would not allow it. What most of the public doesn't realize is that the bulk of the SPR is reserved for the US Dept of Defense...the single largest consumer of oil on the planet.

The SPR was designed to respond to SMALL disruptions of oil imports for short periods. If the SPR were continuously drained it would take 175 days. At the current rate in 175 days the US would import 1.8 BILLION BBLS OF OIL. So over the next 6 months instead of importing 1.77 billion bbls we would import 1 billion bbls. And then we would import 1.77 billion bbls of oil over the following 6 months. And then 3.6 billion bbls every following year. Feeling very "independent" yet? LOL.

IMHO the better value of the SPR is psychological and not practical. It gives the public a false sense of security that it immune from foreigners disrupting our oil consumption. And that leverage has cost the tax payers $28 BILLION + tens of $millions per year (according to the govt) in maintenance.

[AdamB]

$this->bbcode_second_pass_quote('Cog', 'T')hat is not the purpose of selling off part of the SPR. Wapo is fake news. People who quote them have an agenda.

[Hawkcreek]

$this->bbcode_second_pass_quote('Cog', 'T')hat is not the purpose of selling off part of the SPR. Wapo is fake news. People who quote them have an agenda.

[efarmer]

Interesting Rockman, so the public fig leaf is knowing there is an SPR as a buffer against
supply shocks while the strategic reason is a military strategic reserve. It therefore seems
likely to me that the military, slated to get an augmented budget will quietly tell Mr. Trump
that he needs to leave the SPR alone for them, as he seems to have the layman's mindset
much as I had that it is for reducing consumer pain in supply shocks instead of a stock of
oil to allow military fueling for a short period of conflict.

[Revi]

It's only 16 billion and they are going to cut food stamps by something like 200 billion, so it is a drop in the bucket.

[ROCKMAN]

Farmer - "...will quietly tell Mr. Trump that he needs to leave the SPR alone for them". Not sure they have to tell him anything...it's the Congressional law. I haven't found it again after poking around numerous time. But many years ago I found a govt reference that the CONGRESSIONAL LAW (and not the POTUS) that controls the SPR reserves 500 million bbls strictly for the use of the DoD. Which might sound unfair but given how the US military constantly deploys around the globe to remind other countries that we are THE super power it shouldn't come as a surprise.

And a bit of trivia: guess what US oil company supplies more fuel to the DoD? Whatever your answer it's wrong. It's a British company...BP.

[ROCKMAN]

Revi - "...so it is a drop in the bucket." Yes. And I honestly don't see where any of the players get much benefit from it...real or illusionary. But a huge downside for the POTUS if we have to make a bug drawn down (weather or political related) after some is sold.

[Revi]

I agree. It would help to keep business as usual running for a while, but once it's gone we lose that buffer. It's going to be a bumpy ride from here on in. Interesting that a lot is for the military, so once we sell off half of it we really don't have a domestic strategic petroleum reserve. If it's martial law then the military gets all of it. Great...

[AdamB]

$this->bbcode_second_pass_quote('Revi', 'I') agree. It would help to keep business as usual running for a while, but once it's gone we lose that buffer.

[ROCKMAN]

Revi - "If it's martial law then the military gets all of it." If you're referring to the SPR then no declaration of martial law is required. The SPR is owned by the federal govt. More important, it is administered solely by the feds. Anytime the govt decides it wants to reserve every bbl in the SPR for the DoD it already has the authority. It was specifically written as such in the original SPR regulations.

Of course, there might be political repercussions from the voters but they have no power to change the law. But they do have the power to change politicians. Of course, that would take a long time.

[Revi]

We are piling up an extra trillion in debt per year, so this 16 billion is just a small drop in the bucket towards that. I wonder what the real reason is for selling it?

[AdamB]

$this->bbcode_second_pass_quote('Revi', 'W')e are piling up an extra trillion in debt per year, so this 16 billion is just a small drop in the bucket towards that. I wonder what the real reason is for selling it?

[Revi]

Maybe... Buy high and sell low. I think it's not a great move. Even Trump's budget puts us an extra trillion in the hole per year.

[Cog]

The average cost of the oil in the SPR is about $27/bbl. The cost of WTI oil right now is about $48. Do the math. Its buying low and selling high.

Technically the federal government never bought the oil that is in the SPR to begin with. Its payment in royalties for offshore drilling on federal land on the outer continental shelf. But I wouldn't expect you to go to the SPR website like I did to verify all this. Reading is for suckers.

[ROCKMAN]

Adjusted for inflation and including the construction cost the govt says the current cost is around $76/bbl if my memory is good. Which does not include the interest on US bonds that financed the SPR.

[Cog]

$this->bbcode_second_pass_quote('ROCKMAN', 'A')djusted for inflation and including the construction cost the govt says the current cost is around $76/bbl if my memory is good. Which does not include the interest on US bonds that financed the SPR.

[Revi]

Whatever your political persuasion, it seems like a bad decision to me to sell a real asset. I wonder if it was a demand of our creditors? We owe a lot of "money" to a lot of people, and they will demand some kind of collateral eventually.

It would be interesting to see where the oil goes to.

[ROCKMAN]

Revi - "We owe a lot of "money" to a lot of people, and they will demand some kind of collateral eventually." In reality the little bit of economic stability (mostly psychological) the SPR provides to our bond holders is more important. And those bond holders known that a relatively stable US economy is their best "collateral".

FYI: US bond owners don't want the country to every stop refloating our debt. Otherwise they would not have bought the debt in the first place.

[Revi]

I agree. The fact that we keep paying the interest is the important part, and the idea that they have their money parked in a safe place for the time being. They don't want a bunch of physical oil. Maybe we are doing this to give the impression that we are spending less money. If we sell some of the SPR it looks like we are being fiscally responsible and that way we can borrow more against the future. Like pawning some jewelry so we can pay some of the mortgage and keep the house for another month.