Gov't Resumes Oil Purchases For Emergency Stockpile

[Purveyor]

Source: Associated Press

By H. JOSEF HEBERT – 3 hours ago

WASHINGTON (AP) — Taking advantage of low oil prices, the government is resuming purchases of crude oil for its emergency stockpile.

The Energy Department said Friday it will seek contracts and make other arrangements for the delivery of nearly 20 million barrels of oil to the government's Strategic Petroleum Reserve in the coming months. The reserve, a system of caverns on the Louisiana-Texas coast currently holds 702 million barrels of crude.

The department said it will buy 12 million barrels to replace the oil that was sold from the reserve in 2005 to meet shortages after Hurricane Katrina disrupted oil production in the Gulf of Mexico. Another 2.18 million barrels will be bought to make up for oil that didn't go into the reserve last year after Congress banned purchases because of high prices and tight supplies. The ban expired at the end of the year.

The government also is calling for the return of about 5.5 million barrels of oil that was loaned to refiners last year after hurricanes Gustav and Ike disrupted supplies.

These actions, along with purchases previously planned for 2009 of about 25,000 barrels a day will bring the government reserve to its storage capacity of 727 million barrels by the end of the 2009, the department said in a statement. That's equal to about 70 days of oil imports.

"DOE plans to take advantage of the recent sharp decline in crude oil prices to enter the market," said the department. It said it will use the $600 million received for the oil in 2005 to replace that oil and buy additional oil.

Read more: http://www.google.com/hostednews/ap/article/ALeqM5juSIIS9i28uFaXSOoQGNe6M9cwPQD95F91N00

[MercutioATC]

1. Ahhh...the government finally understands "buy low, sell high"...

...until the next time, that is.

[CLANG]

2. They learn very VERY slowly

Gas has been about this low for weeks or more.

[Angleae]

6. And forget very very quickly.

[DainBramaged]

3. I will bet you somewhere in the "loan agreement"

the oil was sold so that the oil refiners make money, NO ONE walks away from the government trough hungry.

[Mnemosyne]

4. Bastards did it to increase demand and jerk prices upward. Jumped to

$1.759 today here from $1.659.

[McCamy Taylor]

5. Bush probably locked Obama into a high price that can rise but not fall to help

his oil buddies in the months to come.