The Department of Energy announced this Thursday its plans to sell crude oil from the Strategic Petroleum Reserve (SPR), during fiscal year of 2021. Deliveries could start in May of 2021, or even as soon as April, 2021.
The amounts of the selling are yet to be disclosed, as the DOE is yet to assess the amounts of the selling in March. The covid-19 impacts on economy and lower crude oil demand are factors to consider.
“DOE remains confident in the long-term health of crude oil markets. During the current period of economic recovery, the Department recognizes that a conservative approach to oil sales is prudent,” the Department underlines.
The Strategic Petroleum Reserve is a special portion of crude oil that the U.S. government reserves for emergency times. It has a long history of protecting the American economy in front of disasters like hurricanes, geopolitical events, or emergency shortages like the ones provoked by the pandemic.
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Strategic Petroleum Reserve stored underground
DOE is allowed to sell from the SPR since the 403 section of the Bipartisan Budget Act, from 2015, and the Consolidated Appropriations Act, from 2018, mandated a sale of around 10 million barrels.
On the other hand, the Strategic Petroleum Reserve is located in four sites in Texas and Louisiana; stored underground in salt caverns. Allowed by the 2020 modification of the CARES Act, the Secretary of Energy may sell additional input from the reserve to achieve $450 million in revenue, which will be spent in part in an infrastructure modernization.
According to DOE’s report, to achieve that amount of revenue, additional 10 million barrels may have to be sold. “After the Department establishes its FY 2021 sales plan, all sales will be publicly announced”, the Department report reads.
As the sale from the SPR is public and open, the DOE welcomed companies that wish to participate in the sale, and offered a webpage from which participants will register for the sale.