To: Mike from La. who wrote (27578 ) 8/13/1998 1:34:00 PM From: Tulvio Durand Read Replies (2) | Respond to
Here's copy of my FAX to Randy "Duke" Cunningham (US Rep., San Diego). Feel free (anyone) to send something like it to your US congressman.
Dear Duke,
An opportunity is presented for increasing our Strategic Oil Reserves while at the same time helping out our small independent oil producers who are being forced out of business because of the low oil prices.
Background:
NEW YORK, Aug 11 (Reuters) - The U.S. Department of Energy (DOE) said Tuesday it has reissued an offer to lease oil storage in the Strategic Petroleum Reserve (SPR), after it failed to attract any bids from companies in its first solicitation.
The DOE also said the terms of the offer have been changed, allowing companies to bid on a total of 20 million barrels of storage space in the SPR salt caverns along the Gulf Coast.
Initially, the DOE had offered four solicitations of five million
barrels each. But the agency received no acceptable bids for its first solicitation, which closed August 6.
The DOE said its latest solicitation will remain open indefinitely. Companies can submit offers to deliver the oil between September and December. The first bids under the new terms are due by August 18.
The DOE announced the original offer last month, saying it would take payment for the space in the form of oil in order to boost the reserve at a minimal cost to taxpayers. The SPR holds just 563 million barrels of oil at the moment, leaving 117 million barrels of spare capacity.
Discussion and recommendation:
I wonder why DOE is inviting bids on only 20 million barrel storage when
the Strategic Petroleum Reserve has 117 million barrels of spare
capacity. Also, instead of leasing storage I think it would be smarter
for DOE to buy 117 million barrels of crude at the current bargain rate
for later resale when oil becomes more expensive. It would be a win-win situation for (1) US military preparedness, (2) US profit if it decides to sell off the oil later when it becomes more expensive, (3) US independent oil producers who are now going out of business because of low price of oil, (4) Cash-strapped oil exporters Indonesia, Russia (who the US is trying to bail out with IMF loans, etc.), Venezuela, et al who are struggling with forced oil-production reductions. Moreover, filling up our SPR could work off the oil glut in weeks instead of the projected four-to-six months, thereby alleviating impending world crises that much faster.
I was told by someone on the Internet that a bill has been initiated in the US Congress (sorry don1t have the particulars) for purchase of 28 million barrels of oil on behalf of a group of small independents, who say they are going bankrupt due to crude prices. In asking for US govt help the Association of Rocky Mountain Producers said that unless Congress took immediate and very strong action, 15-20% of US production would be permanently lost. The same source said the Senate did approve the bill by attaching it to another bill that was passed and is now subject to reconciliation between the House and the Senate.
Duke, instead of purchasing just 28 million barrels why not go for the whole 117 million barrels that the SPR is capable of storing? I think that makes more sense to do the latter. As for funding, there should be emergency funds available for a good cause like this one. If not, I would suggest tapping the Social Security Fund, with repayment to the Fund (with profit) from future sale of the appreciated oil.
Salutations, etc.
