US abandoned product oil reserve plan
According to Platts, Steven Winberg, assistant secretary of fossil energy affairs at the US Department of Energy, said the US Department of Energy abandoned the establishment of the West Coast and Southeast Asia because of the high cost and possible distortion of the market. Plan for refined oil reserves.
Weinberg said in a letter that the refined oil reserve is an "inefficient, costly solution" to address regional fuel supply disruptions.
“Unlike crude oil reserves, refined oil reserves must be replaced on a regular basis to maintain product quality in an emergency. This will require the US government to completely hand over existing stocks several times a year and sell existing stocks and purchase new stocks in a fixed period. "Weinberg explained and stressed that "this trading cycle allows the US government to compete directly with the private sector, or 'distort the market.'"
It is understood that Weinberg's letter is a response to the latest report of the US Government Accountability Office (GAO) on the US Strategic Petroleum Reserve (SPR). The report recommends that the US Department of Energy conduct research on the costs and benefits of refined oil reserves in all regions.
The disclosed GAO report said that in the increasingly globalized oil market, “higher levels of private sector can help alleviate the risk of supply disruption, thereby benefiting the United States and the rest of the world.”
In February of this year, the US government in its proposed budget proposal called for the sale of 1 million barrels of gasoline in the northeast region to the private sector, saying that the reserve was “unutilized and had problems in terms of cost efficiency and operation”.
It is understood that the above gasoline reserve was established in 2012 after the United States experienced a shortage of gasoline due to Hurricane Sandy. At present, the distribution of gasoline reserves in the United States is: New York Harbor has 700,000 barrels, Boston has 200,000 barrels, and South Portland, Maine has 100,000 barrels.
For the oil product reserves in the western and southeastern coastal areas, the US Department of Energy conducted research in 2015. According to the GAO report: "According to US Department of Energy officials, the probability of severe weather events on the southeast coast is higher, but the impact is not significant; while the West Coast has a lower probability of severe weather events, but the impact is even more serious."
Thus, the 2015 US Department of Energy survey initially concluded that the Southeastern region's refined oil reserves would bring “significant net economic benefits” to the region and the United States, especially in the event of a hurricane. At the same time, there is a need for a “further analysis” of the benefits of the West Coast refined oil reserve.
At the same time, the GAO report calls for an SPR diversification strategy. The report believes that the US Department of Energy should consider diversifying its reserves, not just crude oil, but also gasoline and other refined products.
“The current SPR inventory may not be effective in mitigating the impact of oil product disruptions, especially when the hurricane destroys the refinery or distribution infrastructure,” the report said.
However, Weinberg said: "Given that the United States has the world's largest refining capacity, SPR will supply a lot of crude oil to refineries and then reach the refined oil market through existing distribution systems.
In terms of strategic crude oil reserves, the United States has also been selling sales news in the past two years. It is reported that SPR currently has 660 million barrels of crude oil. Congress authorized the US Department of Energy to sell 290 million barrels of crude oil by 2027, which means that the total US SPR crude oil inventories will fall to about 400 million barrels.
GAO expressed concern: “The potential uncertainty may complicate the US Department of Energy's SPR program. The sector does not consider possible future market conditions, such as a decline in net crude oil imports, nor a measure of commercial reserves in response to supply disruptions. The role."
Weinberg said: "It is expected that a new special program resource report will be submitted to Congress in October this year. The report will consider the oil market forecast, private sector opinions and other relevant factors, and propose the best scale and evaluation of the US SPR."
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