The Department of Energy (DOE) unveiled a proposal today to add 28 million barrels of oil to the strategic petroleum reserve (SPR). U.S. Senator Daniel K. Akaka (D - Hawaii) welcomed the SPR fill initiative as "good news for Hawaii's energy security."
In the past five years the volume of oil in the SPR has steadily declined. In 1996 and 1997, the United States sold part of the emergency oil reserve to reduce the deficit. In 1992 and 1993, funds appropriated for SPR purchases were diverted to pay for operation and maintenance of SPR facilities. As a result of these actions U.S. energy security has been significantly weakened. The Energy Department's action will reverse this trend and increase our emergency oil reserve.
DOE will employ a creative mechanism to achieve this increase. The federal government collects royalty payments from oil wells drilled in U.S. waters located in the Gulf of Mexico. Federal law allows the U.S. government to receive a volume of oil equal to the value of the royalty, rather than an actual payment. DOE announced that it intends to exercise the option to collect oil valued at $28 million from the royalty wells and store it in the SPR.
"Hawaii is the most oil dependent state in the Nation," Akaka noted. "For the first time in more than a decade we will see an increase in SPR oil. That's good news for Hawaii's energy security. The more oil we store in the SPR the more secure Hawaii will be in the event of an oil supply disruption."
On November 13, 1998, President Clinton signed the Emergency Petroleum Supply Act, a bill introduced by Senator Akaka, into law. During an energy emergency, the Akaka measure guarantees that Hawaii will receive an emergency supply of oil as well as expedited tanker deliveries. "The success of the Emergency Petroleum Supply Act depends upon a high volume of oil in the SPR," Akaka warned.
"This DOE action is a one-time event," Akaka continued. "I will do what I can to make this initiative permanent. The U.S. must continue to add to its emergency oil reserve."
