The SPR should be downsized

(edited)

The US once imported million of barrels of light oil into ports on the coast of the Gulf of Mexico. The US is now exporting by sea to foreign customers 20 million barrels of light oil per week from Texas and Louisiana. The US government is storing over 300 million barrels of light oil adjacent to our export ports. Are we afraid of a revolt in the Permian?

Edited by Levid
Make clear that the SPR and not commercial inventories are being discussed.

Share this post


Link to post
Share on other sites

The U.S. is starting a large sale of crude in a couple years from the SPR.  As for the sale, you speak as if the U.S. oil industry is operated by the government and one can order refiners to take crude from the SPR over imports or from wherever else.  The majority of crude imported to the U.S. is not "light crude" (crude with an API gravity of 37-42);  most crude would be classified as medium-heavy, such as what is found in Canada's oilsands, sold as WCS, Venezuelan Heavy, Mexican Mayan or Arab Heavy from Saudi Arabia.

EIA shows that no more then 10% of U.S. imports would be classified as "light oil" by API Gravity:

https://www.eia.gov/dnav/pet/pet_move_ipct_k_a.htm

So the whole problem for the SPR and possibly U.S. refiners at the moment is that there may not be enough of the appropriate crude and far too much light stuff, such as Permian shale.  

And another problem for U.S. refiners with SPR is that they won't know exactly what they are buying until the feedstock is processed;  so unless there is an emergency or a massive discount, there isn't much incentive for free enterprise, non-state operated refineries to purchase crude from SPR as long as non-SPR supply is available.

Share this post


Link to post
Share on other sites
Sign in to follow this  
Followers 0