Republicans probe DOE’s authority, budget for refined-products stockpile

Published in CSP Daily News FUELS NEWS May 28, 2014

DOE Debuts First Regional Gasoline Reserves5/2/2014

WASHINGTON — Despite a briefing by the U.S. Department of Energy (DOE), Republicans on the House Energy Committee remain unsatisfied about the management details of the Strategic Petroleum Reserve (SPR) and an emergency, one-million-barrel gasoline reserve planned for the Northeast, according to a report in Reuters.

Leaders of the House and Energy Commerce Committee had recently written Secretary of Energy Ernest Moniz for more details about the management of the SPR after the department held its first test sale of crude from the government stockpile since 1990. The federal government created the SPR on the Gulf Coast in the 1970s after the Arab Oil Embargo to provide a cushion in the event of another major supply disruption. It currently holds around 691 million barrels of oil.

According to a DOE spokesperson, the recent sale of five million barrels of SPR oil was meant to help determine “the system’s capabilities in the event of a disruption,” especially in light of the United States’ rise as a global producer of crude oil.

In its letter to Secretary Moniz, panel members noted the sale “occurred against the backdrop of increased oil production nationwide as well as continuing threats of global energy supply interruptions, the first changeover in SPR’s management and operating (M&O) contractor in 20 years, and an aging SPR infrastructure.”

Republicans have typically discouraged tapping the SPR except in times of severe supply disruption, fearing that it could distort oil prices.

The House Energy Committee members also questioned the planned creation of the first regional refined petroleum reserve, made up of two sites in the Northeast that will each store 500,000 barrels of gasoline to help tide the area over in case of another catastrophic disruption such as Super storm Sandy.
The DOE hopes to have the reserve open by late summer.

In particular, the panel challenged the DOE’s authority to create the refined petroleum product reserve, citing its absence in the department’s 2014 and 2015 budget requests, and asked for more information on how the DOE selected the locations and contractors.

But despite a briefing last week by DOE officials, the panel remains unsatisfied, according to Reuters, which quoted an anonymous committee aide saying that the panel “continues to have questions about the current and future status of the SPR.”

While the committee is planning to continue its oversight of the gasoline reserve, it has not scheduled any hearings yet.