Fooling Around With Some Numbers -- Help Pay For The $1-Trillion Infrastructure Bill With Proceeds From The SPR -- June 24, 2021

Updates

June 26, 2021: update.  

Original Post

"Scare" headline of the day: US could sell oil from the SPR to pay for the infrastructure bill.

OMG. How many times have we heard this? 

So, what are we talking here?

In May/June, 2021, timeframe, US offered to sell nine million bbls of oil from the SPR. I don't know how much oil was actually sold. Successful bidders were to take delivery as early as May and deliveries were to be completed by June, 2021.

How much oil does the US consume on a daily basis:

• 2020, Covid lockdown: 18 million bopd
• 2019, pre-Covid lockdown: 20 million bopd

Nine million bbls/30 days? Let's double that and round to near "ten": Twenty million bbls/30 days.

Twenty million bbls / 30 days = 0.67 million bbls/day.

How much oil does the SPR hold? 700 million bbls.

20 million bbls / 700 million bbls = 3% each month if the sales were to continue indefinitely.

20 million bbls x $60 = $1200 million  = $1.2 billion / month.

$1 trillion / 1.2 billion = 833 months = 70 years.

0.67 million bbls/day / 20 million bbl/day = 0.67 / 20 = 3.35%. 

Bakken: one million bbls/day.

SPR sale of 20 million bbls/30 days = 0.67 million bbls/day, about two-thirds of what the Bakken produces. 

The big question is to what degree the sale of SPR crude oil would meet the expected demand/supply gap?  

All things being equal, selling oil from the SPR simply increases the storage deficit (link to S&P Global Platts). 

Draining the entire SPR -- the entire SPR -- would raise $45 billion at current prices ($64). Link here.

• $45 billion / $1 trillion = 4.5% -- LOL.
• $7.5 billion for EV charging stations

Bottom line:

• this will generate a lot of political rhetoric: selling SPR oil to pay for the infrastructure bill
• won't amount to a hill of beans
• such talk often affects price of oil
• by the time the SPR oil runs through the overall system, it will have almost no effect on the price of gasoline
• whether it affects price of crude oil is yet to be seen
• if selling oil from the SPR has ever affected the price of oil:
• it has been minimal;
• it has been self-limited:
• unless I missed something of consequence which is always possible;

Note: I often make simple arithmetic errors. Matters not to me. I was just curious what the numbers even meant, in a ballpark way of thinking. Folks will run their own numbers and come up with their own conclusions. I look forward to the numbers Brian Williams and the NY Times staff come up with.

Still my favorite video, "really bad math." I think this is priceless. [This will be removed by YouTube.]