Posted on 10/31/2015 5:45:29 PM PDT by UMCRevMom@aol.com
Lawmakers are pushing legislation that could result in the selling off of 266 million barrels of oil from the country’s Strategic Petroleum Reserve (SPR) over the next decade, mostly to fund more government spending.
Legislation for health care, highway funding and financing the government could end up drawing on down on oil supplies meant for emergency situations. If all three bills are signed into law, some 266 million barrels, or nearly 40 percent, of the current 695 million barrel SPR would be sold off in the next decade to raise about $23 billion.
“The 114th Congress has introduced three separate bills that would fund non-energy policy goals by mandating crude oil sales from the Strategic Petroleum Reserve,†according to an analysis by the consulting firm ClearView Energy.
ClearView noted the health care bill, called the 21st Century Cures Act, was the least likely to hit President Barack Obama’s desk despite passing out of the House with a veto-proof majority. On the other hand, the two other bills passing a budget and funding highways are more pressing issues to Republican and Democratic lawmakers. Just those two bills alone would draw down on 186 million barrels.
“Elected officials could face grave political penalties for failing to raise the debt ceiling or fund highway construction, but voters aren’t likely to notice the absence of [200 million barrels] of crude oil from salt caverns they can’t see,†ClearView noted.
“Moreover, swollen global inventories and falling oil production system capacity utilization tend to blunt the edge of geopolitical risk, which probably makes it easier for Congress to drill for dollars in the SPR,†the consulting firm added.
Calls to sell of SPR oil come amid a resurgence of crude oil production in the U.S. thanks to hydraulic fracturing and horizontal drilling. As crude output has boomed, U.S. lawmakers have called for a repeal of the crude oil export ban and other policies to help keep America’s energy boom going.
But a consequence of the fracking boom is the SPR has lost some of its importance. With booming crude production, lawmakers can politically afford to sell strategic oil reserves to fund government programs.
The White House called the budget bill “a responsible agreement that is paid for in a balanced way.â€
Republican leadership negotiated the budget deal behind closed doors with White House officials and Democrats. The budget bill includes about $80 billion in spending increases — about $76 billion of which are offset by spending cuts and revenue increases, according to the Congressional Budget Office.
Some Republican lawmakers are hesitant to support the budget, citing concerns over backroom dealings and that not all spending increases are offset. Some lawmakers were furious about their prized programs being cut, like federal crop insurance.
“Make no mistake, this is not about saving money. It is about eliminating Federal Crop Insurance,†said Texas Republican Rep. K. Michael Conaway said in a statement. “The House Agriculture Committee was not consulted regarding any changes to policies under the jurisdiction of our committee.â€
It’s also unclear where key Republicans stand on selling off oil reserves to fund new government programs. Alaska Sen. Lisa Murkowski 18% has criticized such sales in the past, calling them “short-sighted.†This time around, however, Murkowski has been silent.
“Chairman Murkowski is currently reviewing the budget proposal as it relates to selling off oil from our strategic energy and national security asset – the Strategic Petroleum Reserve,†Michael Tadeo, Murkowski’s spokesman said in an emailed statement to reporters.
“As the budget process advances, we will further evaluate steps needed to update our nation’s energy and natural resources policies,†Tadeo said.
The SPR was created by President Gerald Ford in 1975 to improve America’s energy security should the country face another devastating oil embargo, like the one the Arab’s imposed in 1973 over U.S. support for Israel.
The SPR is the world’s largest supply of emergency crude oil with a capacity to hold 713.5 million barrels of oil.
Current legislative proposals to sell off oil aren’t the first non-emergency drawdowns to occur in recent years. In 2011, Obama sold 30 million barrels to offset potential price increases caused by the Libyan civil war — the sell off had negligible, temporary effect on oil prices.
LOL
It wouldn't surprise me if someday the US does grant China or some other major debtor drilling rights in Alaska, maybe even in the ANWR which Dims have prevented us from exploring and drilling for years. Or other mineral rights in some area of the US.
There won't be any other way to pay the debt unless the gov't stops continually growing it and begins reducing it.
How much could they get for their mothers?
Yeah, that’s real smart, sell while the price is low
More “shovel ready” jobs that don’t exist so the funds can be diverted to special “pockets”.
This federal government deserves to implode - which it soon will. If the NORKS put a missile in there they would be doing us all a favor. If they are laughing too hard to do it, our finances will just blow up instead and take us down so they needn't waste the precious rocket fuel.
Excellent idea!
Our enemies won't need an EMP, there won't be enough reliable power to hit us with an EMP.
“some 266 million barrels, or nearly 40 percent, of the current 695 million barrel SPR would be sold off in the next decade to raise about $23 billion. “
$23 billion over 10 years? $2.3 billion a year? Really?
They cannot cut $2.3 billion in a $4 trillion budget?
I'm a petroleum geologist who has been working in the industry for nearly 4 decades. I have worked for oil companies from small outfits to majors (Think four of the former 7 sisters.)
I must have missed something.
The only way we will be swimming in domestic oil is if the administration decides to start boiling us in it.
Yep, we've done one hell of a job bringing production up and prices down, but there is a limit to how low prices can go before drilling stops.
From there, the overall production will decline. Simple reservoir mechanics.
If we don't replace the depletion drop in existing production with new production, we don't even keep pace. If there is an increase in demand, production has to cover that, too, and the only way to do that is with new wells, new producing formations, and new reservoirs, and to some extent, new technology. That is how we got this far.
It isn't like hitting a switch, all that research, data gathering, training the personnel, building the infrastructure, producing the tools, and getting the paperwork done (leases, permits, etc.) to drill those wells takes time and one hell of an investment.
No, we aren't exactly swimming in domestic oil now (we still import a lot, only the Saudis producing as much as they can is causing the glut), and production will decline even more over the long run if our government crashes the price by dumping oil on an already down market.
It is like letting someone manage your portfolio who buys stock at 100/share and sells at 30.
Selling more shares doesn't make the deal more attractive, and losing billions now and likely spending billions more above the current sale price in the future to replace it is just stupid.
There are other ways to raise money, including land sales, opening mineral exploration and mining on Federal Land (the Government gets a cut of the production, just as it does with oil), downsizing the Government, eliminating agencies, redundancy, and waste, and herding the cats on Capitol Hill back inside the fence the Constitution was supposed to keep them in would all go a long way toward balancing the budget.
That isn't so much to ask. Most of us have to balance our budgets and live within our means, it's high time our Government did.
Another expected robbing of future generations. When organized crime holds power they produce another Detroit.
Spreding the blame is what this to take heat off the head of the snake. What we are seeing is the result of African rule. See Detroit, Baltimore, other cities and the continent of Africa.
I have been suggesting the very same for longer than I can remember. Why should the government own all the “people’s” land?
Good Grief!
Buy High.
Sell Low...
We import ~7 million barrels a day from other nations. We don’t have the ability produce that domestically on top of our current production.
We import far more oil now than we did when we started the SPR.
Domestic oil production has already started falling again with the lower oil prices.
This is treason.
Thanks for the info Joe. I am still amazed at the information other FReepers are able too provide on such varied subjects.
My point was we have much more Oil in the ground that anyone would have ever thought we had just ten Years ago.
I have a very Liberal B-I-L. Whenever we discuss Big Oil, which he loves to do since he hates them like crazy, he insists we have less than a 50 Year Supply of Evil Petroleum.
When I correct him, he stares in disbelief. I can only attribute his refusal to accept the truth as his having an aversion to Googling it.
Back to the topic at hand, we aren’t at the mercy of OPEC like we used be. It is Economics, not the fact that the Reserves aren’t there for the taking if we choose to do so.
In other words, our wonderful Government in action.
He’s committed treason over and over, so has the Senate and Congress and nothing happens. I wouldn’t get excited over it, seems America has given up.
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