US still accepting reserve bids
US energy officials stated they will continue to accept bids from oil
companies to supply the country’s Strategic Petroleum Reserve, despite calls
from Democrats to suspend deliveries in response to record oil prices.
The US Energy Department will go ahead with its plans to accept bids from
oil companies on 13 May.
Winning bidders receive up to 13 million barrels of royalty-in-kind crude
drilled from federal leases in the Gulf of Mexico in exchange for the oil
they give to the Reserve.
The in-kind oil is turned over to the government by companies to cover the
royalties owed on the crude they find in lieu of paying cash royalties.
The Energy Department then takes that royalty oil and swaps it for the
grades of crude that meet the stockpile’s requirements.
The administration wants to fill the reserve to its 727-million-barrel
capacity to ensure the US has the biggest cushion possible to offset any big
disruption in petroleum supplies.
US House representatives have urged the government to stop filling the
reserve for a while, asking instead that that oil be used to increase supply
in the market and bring down prices.
Oil prices hit another record of almost $125 a barrel today.
US Energy Secretary Sam Bodman rejected lawmakers’ appeals, saying the
amount of oil going into the stockpile would not have much effect on prices.
08 May 2008 21:25 GMT
| last updated:
08 May 2008 21:30 GMT
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