US examining scope of strategic oil stockpile

Market: Crude oil, Oil products
20/10/14

The US Energy Department is conducting a broad review of the US Strategic Petroleum Reserve (SPR), rethinking the size, configuration and role of the emergency stockpile.

The US Government Accountability Office (GAO), in a report released today, urged the Energy Department to reassess the size of the 691mn bl emergency reserve. In May, that crude – valued at $73bn – was enough to cover 106 days worth of oil imports in the event of a supply disruption, while private companies held another 141 days.

That's far more than the 90 days of public and private reserves the US is required to hold as a member of the consumer country organization the International Energy Agency.

The GAO report recommended the Energy Department "undertake a comprehensive reexamination of the appropriate size of the SPR in light of current and expected future market conditions." The Energy Department last assessed the size of the SPR in 2005, "when the general expectation was that the country would increasingly rely on foreign crude."

Principal deputy assistant secretary for fossil energy Christopher Smith, in a 17 September letter to GAO, said a study looking only at the size of the reserve would be "too narrow in scope" and would fail to examine the reserve's ability to reduce the effects of a supply disruption.

Instead, the Energy Department has launched a long-range review to determine "what the near-term and long-term role of the SPR should be," Smith said.

The review will examine composition of the reserve, as well as volume, location of petroleum products, infrastructure needs, distribution capacity and performance capability, Smith said. The review also will look at financial, managerial and legal questions.

The Energy Department did not immediately respond to an inquiry about the review.

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US examining scope of strategic oil stockpile

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