Strategic Petroleum Reserves:

Analysis of Alternative Financing Methods

RCED-89-103: Published: Mar 16, 1989. Publicly Released: Apr 19, 1989.

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In response to a congressional request, GAO examined alternatives for acquiring oil for the Strategic Petroleum Reserve (SPR).

GAO analyzed three alternative funding proposals and compared them with the current method for financing SPR, and found that: (1) raising revenues through special bonds and taxes, asset sales and receipts would not likely raise enough revenue for the government to purchase meaningful quantities of oil for SPR; (2) under this proposal, short-term budget outlays and the budget deficit would decrease, but the long-term deficit would increase; (3) renting or leasing oil would initially cost less, but over several years, this alternative would be more costly because of the cost of borrowing money or the possibility that tax revenues would decrease; and (4) establishing SPR as an off-budget entity would probably impact the budget because SPR generates no revenues and would require some federal support.

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