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Trump to tap into SPR?

By: Daniel Guttman / Posted on: July 18, 2018

Among the many geopolitical issues going on in the world effecting the oil market, there have been reports this week that President Trump is considering tapping into the Strategic Petroleum Reserve (SPR) in an effort to lower gasoline prices. According to Bloomberg, “options are under consideration ranging from a 5 million barrel test sale to a more sizeable release of 30 million barrels and a third option of a larger release that would be coordinated with other nations.” Utilizing any of these options would create a shift in global crude oil prices.

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What if we run out?

By: Daryl Milliner / Posted on: March 16, 2018

Has the thought “What if we actually run out of oil” ever crossed your mind?  Well, even though it is very unlikely any time in the near future, it could happen, but with properly managed reserves, again, it is very unlikely that it will. U.S. Strategic Petroleum Reserve (SPR) is the world’s largest supply of emergency crude oil. These stockpiles are owned by the Federal Government and are stored in enormous underground salt caverns spanning across the entire Gulf of Mexico coastline. These national oil reserves have been around for at least 50 years, as President Ford was the one who established SPRs by signing the Energy Policy and Conservation Act (EPCA) in December of 1975. While the Gulf Coast remains a popular domicile for exploration and distribution by U.S. refiners, the abundance of salt caverns along the coast make it the ideal location for fuel storage. 

Starting in 1977 the United States has acquired 62 enormous salt caverns along the coastlines of Louisiana and Texas to store crude. The salt caverns were developed by drilling wells into the huge salt domes and injecting them with freshwater to dissolve the salts. The dissolved salt solution is then transported by pipes to disposal wells. By enacting this process of “solution mining” precise dimensions are created which can hold anywhere from 6-35 million barrels of oil, as stated in the diagram. These reserves are used in the event of national disasters, major storms, or outages in oil producing countries. Last year when Hurricane Harvey hit Texas, 5.3 million barrels of oil were sold from the government to four refiners to help aid in the fuel shortage.  Currently, we have 260.1 million bbls of sweet crude (petroleum with less than 0.42% sulfur) and 405.4 million bbls of sour crude (petroleum containing high levels of sulfur) totaling 665.5 million bbls since March 9th 2018. This week the U.S. Department of Energy said it would sell 7 million barrels of sweet crude oil to comply with a law enacted in 2015 to help fund the government. The DOE will be accepting offers on this oil until March 21st and deliveries will hail from the SPR West Hackberry site from May 1st – 14th and from May 1st – 31st from the Bryan Mound site.

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Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.

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