Our national Strategic Petroleum Reserve, located in Louisiana and Texas, now holds approximately 695 million barrels of crude oil. It was created in the 1970’s during the oil embargo crisis and is and now apparently was created as a backup during a national emergency.
The spigot has been opened only three times, two in times of national emergency and once as a political move. Number one was during the first Gulf War, number two was after hurricane Katrina when many of our oil rigs in the Gulf of Mexico were damaged or at risk. Number three, in 2011, a political stunt by Obama in order to try and appease consumers screaming about the high price of gasoline.
Now we have a new use for the SPR, one created by Congress just yesterday. Using it as an ATM.
Part of the budget deal passed by the House was to sell 58 million barrels from 2016 to 2025 in order to pay for new highway infrastructure. This is about 8% of the reserve. The Congressional Budget Office used the price of $88 a barrel in their figures which state a sell off would raise $5.1 billion. But right now the price of crude is $43 a barrel. Only an insane person would sell a stock at its low point, but apparently Congress Critters are more concerned with getting re-elected by not imposing a modest gas tax increase instead. And in a volatile world, no one knows what the price of crude will be in 2025.
Congress and Obama don’t seem to be worried. One economist, Phillip Verleger had this to say:
“The United States is swimming in oil. The SPR, to be blunt, is superfluous.”
But Jason Bordoff, director of the Center on Global Energy Policy at Columbia University, who formerly was President Obama’s National Security Council adviser on energy and climate had this to say:
“Using the SPR like an ATM is not a good idea,”
Oh, and highway funding won’t be the only reason to sell some of our precious crude. It seems the SPR needs some sprucing up, so can one guess where the money will come to do that?
Why, from the sale of crude in the SPR, of course.
Crossposted at Conservative Outlooks