WASHINGTON Dec 9 The U.S. government is slated
to sell $375 million worth of crude oil from the country's
emergency reserve this winter after Congress passed a temporary
spending bill on Friday that contained a measure authorizing the
President Barack Obama's administration has pushed Congress
to approve an up to $2 billion plan for a revamp of the
Strategic Petroleum Reserve, a string of heavily guarded
underground salt caverns along the Gulf of Mexico filled with
crude. The stash currently holds about 695 million barrels of
A Department of Energy spokeswoman said authorization in the
spending bill "will allow the Department to take necessary steps
to increase the integrity and extend the life" of the reserve.
Congress passed the original funding for the reserve after
the 1973 to 1974 Arab oil embargo to protect the country from
global supply disruptions that have the potential to spike
domestic fuel prices and damage the U.S. economy.
Many of the reserve's steel tanks and pumps are now rusting
after decades of being whipped by storms and exposed to salt
air. A plan submitted to Congress by the Energy Department in
September said "this equipment today is near, at, or beyond the
end of its design life."
In addition, the U.S. oil boom of the last decade has
reversed the direction of many pipelines away from the reserve,
making it more difficult to get oil to market in a hurry.
The $375 million sale, or nearly 7.3 million barrels of oil
in today's price, is just the first planned installment. For
each of the next three fiscal years Congress would have to
approve the annual sales to reach the up to $2 billion revamp
plan. It remains to be seen whether President-elect Donald Trump
would urge Congress for the annual authorizations in the coming
This sale, which could take place seven to nine weeks after
the temporary spending bill is enacted, would pay for the design
of the revamp of the SPR and other pre-construction costs.
Further sales would pay for construction of new equipment and
new marine terminals to allow the reserve greater capacity to
ship oil by vessels.
(Reporting by Timothy Gardner)