Most of you have probably read that the Republicans have pretty much caved to Obama on a proposed two year spending bill. In exchange for Democratic support for additional domestic and defense spending, in equal amounts, the House agreed in conference to support the agreement.
One of the ways Congress intends to pay for the additional spending is to sell oil from the Strategic Petroleum Reserves over the next seven years.
As most of you know, this country has the capacity to store up to 73 million gallons of oil in ancient salt caverns down in Texas and Louisiana. There are currently 43 million gallons in storage. You probably also know that we implemented the Strategic Petroleum Reserve program in 1973, in response to the first Middle East oil embargo. (This was in retaliation for our coming to the aid of Israel during the Arab attack on them in '73.) The SPR was established to provide for the energy needs of the military in times of crisis.
While I'm not a big fan of all of this additional spending, I think selling off the oil reserves is not an entirely bad idea. It will certainly keep oil prices low and provide a little more money in the consumer's pocket.
Ironically, we are able to sell off these oil reserves because, despite Obama's stiff opposition to expanded oil drilling, the American fracking programs are generating excess oil to the extent that oil prices have dropped from $125 dollars a barrel to $43 today. And the drop in prices has begun to really hurt American companies doing the fracking. If it drops much lower we'll be buying Saudi oil for less than $30 but our home grown energy programs will be out of business since domestic oil extraction is more expensive than Middle East sourced oil. And, as far as defense needs, our domestic producers can support those needs at any given time.
So, for now, selling off our reserves is a "win-win"...it keeps our domestic producers in business and finally begins to give the consumers a break on gasoline.
While I would much prefer that federal oil revenue go toward paying down the national debt, that's probably too much to ask for from those big spenders in Washington.