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US Releases 1 Million Barrels Of Oil From Strategic Reserve

Public Policy

The U.S. Energy Department on Thursday released 1 million barrels of oil from the Strategic Petroleum Reserve and a White House adviser said more could flow after Tropical Storm Harvey inundated Gulf Coast refineries and drove up motor fuel prices.

In the first tapping of the reserve for an emergency since Hurricane Isaac in 2012, two emergency exchanges of oil of 500,000 barrels will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana, the department said.

That plant has not been hit by Harvey, which hammered Houston and the Gulf Coast with catastrophic flooding and shut about a quarter of U.S. refinery capacity.

The release of 1 million barrels is small compared with U.S. demand of nearly 20 million barrels per day. The move did not halt rapidly rising gasoline prices, which surged more than 13 percent on Thursday to a two-year high above $2 a gallon ahead of the high-demand Labor Day holiday.

An adviser to President Donald Trump told a White House briefing that more oil could be sprung from the SPR.

“I think we would be very comfortable tapping into that and providing that alleviated resource,” homeland security adviser Tom Bossert told reporters.

Under the exchange, 400,000 barrels of sweet crude and 600,000 barrels of sour crude oil will be sent via pipeline from an SPR cavern in Louisiana to the refinery. The government will lend the crude to Phillips 66, which is required to replace the oil at a later date.

The SPR, established in the early 1970s after the Arab oil embargo caused widespread fuel supply panics, contains 679 million barrels of oil, enough to meet total U.S. needs for 33 days, in heavily guarded underground caverns on the Texas and Louisiana coasts.

Senator Urges Release From Gasoline Reserve

U.S. gasoline prices surged anew after Colonial Pipeline Co , which operates the biggest U.S. fuel transport system, said it would shut its main lines to the Northeast amid outages at pumping points and lack of supply from refiners.

The Energy Department “provide assistance as deemed necessary, and will continue to review incoming requests for SPR crude oil,” spokeswoman Jess Szymanski said.

The department did not comment on whether it was asking the Paris-based International Energy Agency to plan a coordinated drawdown of crude from spare supplies. The IEA has said it does not see a need to act for the moment, as the global market is amply supplied.

Democratic Senator Edward Markey of Massachusetts urged the department this week also to release gasoline from the country’s emergency gasoline reserve, which holds a total of 1 million barrels of gasoline in three locations in the Northeast: New York Harbor, Boston and Maine. That reserve, which has never been used, was created after Superstorm Sandy wrecked fuel infrastructure in New York in 2012.


56 Comments on "US Releases 1 Million Barrels Of Oil From Strategic Reserve"

  1. Davy on Sat, 2nd Sep 2017 11:50 am 

    grehg, hollow and fake words that are for general consumption. You try so hard to make it look like you are on the high ground. The truth is you attack and belittle people without impunity. That is until I stood up to you. Looks like we can continue our cycle of attacks. Is that crystal clear enough for you?

  2. rockman on Sat, 2nd Sep 2017 2:34 pm 

    Tom – Since no one has posted the EIA definition of US “commercial oil stocks” I decided to do so. From the footnote of the table containing the 450+/- million bbls of US oil stocks (excl. the SPR):

    “Stocks include those domestic and Customs-cleared foreign stocks held at, or in transit to, refineries and bulk terminals, and stocks in pipelines. Stocks held at natural gas processing plants are included in “Other Oils” and in totals. All stock levels are as of the end of the period.”

    IOW at every moment from the well head or from a ship downloading imported oil every one of the 550 million bbls of oil refined every month in the US is counted as “commercial stock”. Obviously as bbls come into to this category about 18 million bopd leave the category as they are refined.

    So back to the same question: how many of the 550 million bbls that entered the system last month went into long term storage? Obviously the vast majority was processed at our refiners as indicated by the amount of products that came to market.

    And someone mentioned the Cushing, OK. storage facility. Yes: it is the largest storage facility in the world. And why does it exist? It is the largest BLENDING FACILITY in the world. Very little of the US produced or imported oil is acceptable for our refineries. They only process oil in a very narrow gravety range: 31.5 to 32.5 API. That why there’s some much tankage at Cushing: to bend million of bopd that are pipelined daily to the refineries. The primary reason addition tanks have been built at Cushing in the last 5 was to handle the ever increasing amount of Canadian oil imported. And given the dilbit from Alberta was around 23 API every bbl reaching Cushing had to be held and blended with lighter oil before it could be sent to refineries.

    And every bbl of dilbit in the pipelines from Canada and every bbl being blended in tanks at Cushing and every bbl in pipelines from Cushing to Texas refineries and every bbl sitting in tanks at Texas refineries waiting to be run thru the distallation columns is counted as part of the total US “oil storage”.

    Which answers you original question way back up top: why are the releasing 1 million bbls from the SPR if we have 400+ million bbl in storage? So we would have another million bbls of oil heading to the refineries.

  3. rockman on Sat, 2nd Sep 2017 2:42 pm 

    Tom – And given that 1 million bbls of SPR oil will probably take the better part of a month to enter the system (a system that already has about 550 million bbls per month moving through it now) it’s just a PR stunt and don’t mean SH*T. LOL.

  4. Tom on Sat, 2nd Sep 2017 4:09 pm 

    wait, what is a PR stunt?

    I agree that the EIA’s definition of CS & SPR for that matter are so ‘loose’ that practically anything fits into the category. Even stock tanks on a 2-3 BOPD stripper well in East Texas.

    other than that, I guess I lost track of your point.

    The EIA, much like FED is intentionally Over complicates stuff so that most people will just say “this is confusing” & move on. That is a good tactic when you are in the business of deception.

  5. rockman on Sun, 3rd Sep 2017 10:30 am 

    Tom – “wait, what is a PR stunt?”. Releasing 1 million bbls of oil in a month that 550 million bbls of oil enter the system. IOW a 0.2% increase…for just one month. How would you characterize it?

  6. rockman on Sun, 3rd Sep 2017 10:35 am 

    Oh, BTW oil in a tank sitting on a lease is not part of the count. It has to enter the transport system to be part of the talley.

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