The Strategic Petroleum Reserve Amendments of 1989

GAO discussed the proposed Strategic Petroleum Reserve (SPR) Amendments of 1989 and alternative, nontraditional methods for financing SPR. GAO noted that: (1) the amendments extended the authorizing legislation for SPR and required the Department of Energy (DOE) to fill SPR at the highest practicable rate and plan for its expansion to 1 billion barrels; (2) as of April 1989, SPR contained over 565 million barrels of oil; (3) DOE estimated a daily fill rate of 60,000 to 65,000 barrels during fiscal year 1989; (4) SPR may require an additional $5 billion to $6 billion to increase its inventory to 750 million barrels and another $6 billion to increase the inventory to 1 billion barrels; and (5) SPR provision of import protection has decreased due to increases in U.S. oil imports, with SPR inventory providing about 89 days of imports, as opposed to its 1983 through 1987 inventory exceeding 90 days of imports. GAO also noted that proposed alternative financing methods involved: (1) increasing government revenues by selling financial instruments, increasing use fees, selling government assets, or selling futures or option contracts; (2) acquiring oil by means other than outright purchase, such as rental or lease; and (3) establishing a separate SPR entity to handle financing or acquire oil and manage SPR.