Title II — Modifying the Strategic Petroleum Reserve and Funding Conservation and Energy Research and Development

The Strategic Petroleum Reserve (SPR) was created by Congress in 1975, to protect the Nation from any future oil supply disruptions. When the program was established, United States refiners were capable of handling light crude and medium crude and the makeup of the SPR matched this capacity. This is not the case today.

A GAO analysis found that nearly half of the refineries considered vulnerable to supply disruptions are not compatible with the types of oil currently stored in the SPR and would be unable to maintain normal refining capacity if forced to rely on SPR oil as currently constituted, thereby reducing the effectiveness of the SPR in the event of a supply disruption. GAO concluded that the SPR should be comprised of at least 10 percent heavy crude.

This Act implements the GAO recommendation and dedicates funds received from the transactions to existing energy conservation, research, and assistance programs.

the term “light grade petroleum” means crude oil with an API gravity of 35 degrees or higher;

the term “heavy grade petroleum” means crude oil with an API gravity of 26 degrees or lower; and

the term “Secretary” means the Secretary of Energy.

To modernize the composition of the Strategic Petroleum Reserve to reflect the current processing capabilities of refineries in the United States.

To provide increased funding to accelerate conservation, energy research and development, and assistance through existing programs.

exchange as soon as possible light grade petroleum from the Strategic Petroleum Reserve, in an amount equal to 10 percent of the total number of barrels of crude oil in the Reserve as of the date of enactment of this Act, for an equivalent volume of heavy grade petroleum plus any additional cash bonus bids received that reflect the difference in the market value between light grade petroleum and heavy grade petroleum and the timing of deliveries of the heavy grade petroleum;

from the gross proceeds of the cash bonus bids, deposit the amount necessary to pay for the direct administrative and operational costs of the exchange into the SPR Petroleum Account established under section 167 of the Energy Policy and Conservation Act (42 U.S.C. 6247); and

deposit 90 percent of the remaining net proceeds from the exchange into the Infrastructure Renewal Reserve established in section 107.