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In an arrangement with the US Government it could be put into the ground, elsewhere. Doing it without state permission would be an entirely different matter how
by adventured 7y ago
In an arrangement with the US Government it could be put into the ground, elsewhere. Doing it without state permission would be an entirely different matter however. I'm not aware of any very large, privately owned underground storage caverns (such that they could make a dent in absorbing the over-supply).
This is being discussed:
"The U.S. Energy Department is negotiating with nine companies to rent about 23 million barrels of oil storage capacity in its Strategic Petroleum Reserve as part of a Trump administration bid to help drain the country’s growing glut of crude."
https://www.worldoil.com/news/2020/4/14/doe-working-to-lease-out-23-mmbbl-of-strategic-petroleum-reserve-capacity https://www.worldoil.com/news/2020/4/14/doe-working-to-lease...
Here is what the US Strategic Petroleum Reserve looks like (it can absorb some of our over-supply briefly):
> Four underground salt caverns on the coast of the Gulf of Mexico store the oil. That's a central location. The oil can be distributed to nearly half of the U.S. oil refineries either through interstate pipelines or via barges. It only takes 13 days for the oil to enter the U.S. market from the time the president first gives the order.
> There are two cavern locations in Texas. As of September 30, 2018, Bryan Mound held 235.3 million barrels in 20 caverns. Big Hill held 153.4 million barrels in 14 caverns. The other two are in Louisiana. West Hackberry held 199.5 million barrels in 22 caverns. Bayou Choctaw held 71.88 million barrels in 6 caverns.
> The maximum capacity of all four caverns is 727 million barrels.
There is also a good FAQ on it:
https://www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve/spr-quick-facts-and-faqs https://www.energy.gov/fe/services/petroleum-reserves/strate...
- firebird84 7y agoWhy don't we just take delivery of futures contracts directly? Isn't this a great time to fill the reserve?
- glofish 7y agoit is and we do.
- ineedasername 7y agoAlready being done, and that space too is running out.
- burfog 7y agoPelosi blocked that. The workaround is to cheaply rent out the reserve as storage space, with the hope that someday a better congress will allow purchasing the oil.
- joecool1029 7y ago>Pelosi blocked that. Why should the American people pay to fill it when they can now be paid instead to store the oil? The market's decided that the toxic asset needs to go somewhere and the speculators that bought it (not the producers) will pay. >The workaround is to cheaply rent out the reserve as storage space Cheaply? They took a risk in speculating and it didn't work out. The solution is to give them a choice: surrender their oil to the USG (to avoid paying storage fees) or pay the USG for the service of storing it. No bailouts, fuck that.
- koheripbal 7y agoBailout? It's not a bailout. Prices were negative! We'd literally be _getting paid_ to take oil and put it into our reserve. It's literally the easiest financial decision on the planet. The fact that Pelosi blocked it demonstrates a fundamental lack of understanding of basic finance.
- Talanes 7y agoI can understand the impulse, and absent any middlemen it would make perfect sense to have the government step in to buy excess production during a crisis to fill national reserves. But we have speculators who sold us the idea that their profits brought stability to the market, so make them keep playing by their own rules.
- hirsin 7y agoHm, I can't find any sources to this effect. Have one? I vaguely recall a bit about paying over market for petroleum to refill the reserve, with the idea being we fill a demand and prop up the gas industry.
- selimthegrim 7y ago
- state_less 7y agoThe USG can top off the reserve at any time and it'd be chump change. They're spending trillions of dollars these days. They're not concerned with a few billion dollars worth of oil here and there.
- koheripbal 7y agoWith negative prices, it's literally the dumbest financial decision not to take the oil - whatever the quantity we're talking about.
- vkou 7y agoThe reserve is already 90% full.
- koheripbal 7y ago10% of the capacity at what was NEGATIVE $30 per barrel is still a lot of extra money for doing literally nothing. Anyone not filling any available storage is a huge idiot.
- phobar 7y agoI am curious, dohappen to have a source for that statement?
- vkou 7y agoCapacity of 717 million barrels. [1] Inventory of 635 million barrels. [2] 635/717 = 88.5% [1] https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States) https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U... [2] https://www.spr.doe.gov/dir/dir.html https://www.spr.doe.gov/dir/dir.html