Alternative Financing Methods for the Strategic Petroleum Reserve

T-RCED-89-27: Published: Apr 19, 1989. Publicly Released: Apr 19, 1989.

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GAO discussed its analysis of financing alternatives for the Strategic Petroleum Reserve (SPR). GAO found that: (1) alternatives dedicating revenues raised through special bonds, taxes, or asset sales to SPR would increase the long-term budget deficit and raise consumer prices, and could impact federal interest costs; (2) the sale of options contracts on stored SPR oil would not generate sufficient revenue for the government to purchase meaningful quantities of SPR oil; (3) alternative oil acquisition strategies could be more costly because of the private sector's cost of borrowing money and desire for profit; and (4) establishing SPR as a separate entity could impact on the budget deficit if the government provided the funds, because SPR would not produce revenue; and (5) it could not support establishing SPR as an off-budget entity.

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