Feds sell 30.6 million barrels of emergency crude to 15 companies

Traders and oil refiners are among the 15 companies that are buying roughly 30.6 million barrels of crude from the United States’ emergency stockpiles, the Energy Department announced today.

The government inked 28 contracts to sell the oil, with prices ranging from $104.97 to $109.26 per barrel. According to a government list of the winning bids, Barclays Bank nabbed the lowest price in the auction, while the nation’s largest refiner, Valero, paid the highest amount for a portion of the crude it snapped up in the sale.

All told, the government is set to take in about $3.3 billion from the sale.

The Energy Department said it is now coordinating with the winning bidders, federal maritime authorities and the Homeland Security Department “to facilitate and streamline deliveries, including those for companies that have requested early delivery of the crude oil in July 2011.”

The Obama administration announced it was releasing oil from the Strategic Petroleum Reserve late last month — offering up half of the 60 million barrels that the International Energy Agency’s 28 member nation’s committed to put on the market. Administration officials said the move was essential to restoring stability to the market and offsetting the loss of 1.5 million barrels of high-quality light, sweet crude oil daily from Libya during the summer driving season.

Although the announcement initially sent oil prices downward, the cost of crude has since rebounded — and has traded higher than it was even before President Barack Obama authorized the sale. On Monday, West Texas Intermediate crude futures — the U.S. oil benchmark — closed at $95.15 per barrel, just slightly under the trading price before the SPR announcement.

Government officials previously described industry interest in the sale as “very high,” with far more bids streaming in than available oil.

Firms that nabbed the crude include major oil companies — Exxon Mobil, Shell, BP and ConocoPhillips — as well as other independent refiners, such as Valero, Tesoro, Murphy Oil, Sunoco and Marathon.

Valero was one of the biggest single purchasers of the stockpiled oil. The company is buying 6.1 million barrels of oil, some for as low as $105.62 per barrel. The company would not release specific details about its plans for the crude.

But spokesman Bill Day noted that “with the capacity to process 2.6 million barrels per day, Valero can quickly process the crude from this purchase.”

Oil traders also got into the act:

  • Barclays Bank is buying 200,000 barrels of oil for $21 million.
  • Hess Energy Trading Co. is buying 2 million barrels for $212.6 million.
  • Trafigura AG is buying 1.1 million barrels for $116.8 million.
  • Vitoil Inc., is buying 4 million barrels for $432.2 million.
  • And J.P. Morgan nabbed 1.5 million barrels for $105.33 each — making a final pricetag of $158 million.

Plains Marketing, a pipeline operator, also spent $223 million buying roughly 2.1 million barrels.

It is unclear how each bidder plans to use their oil — and how immediately the crude may get refined. Some traders may put the crude in storage, in anticipation of prices rising further.

The government does not bar successful bidders from storing oil for later use or resale. But it does bar the winners from exporting any of the stockpiled crude unless they return an equal volume of refined product to the U.S.

The big demand for the reserve oil stands in contrast to a lackluster response to the last Strategic Petroleum Reserve auction. After Hurricane Katrina damaged pipelines, offshore rigs and refineries in 2005, the U.S planned to sell 30 million barrels of crude from the reserve, but just 11 million barrels ultimately were auctioned off.

65 Comments

  1. J D

    Pure idiocy from a president who has never had a job where he was required to actually be productive and who also knows nothing about the market.

    #1
  2. DJ

    Why sell to the refiners, traders and / or speculators? There’s no shortage? Just for cash?

    #2
  3. Peter

    Why such a bone-headed move? Are slightly high prices really a “national emergency”? NO!!!!!
    .
    And why are they being sold to traders who are just going to mark it up and resell it?
    .
    Just when I think this administration couldn’t make any more stupid decisions, they once again surprise me with another.

    #3
  4. Pat

    Even Bush didn’t pull this crap during the 2008 oil price spike.

    We get no oil from Libya. Subsidizing Europe’s wars yet again.

    #4
  5. kalki

    Sell low, buy high…way to go, Feds…

    #5
  6. Chuck

    Hopefully the govt. made a profit on this oil.

    #6
  7. Reality_Sets_In

    30.1 million bbls is not going to do anything. Just saw gas is on the rise …again!

    #7
  8. Matt S

    Is this going to make our gas cheaper as a result, or are these companies just going to make more profit at our expense?

    #8
  9. whoop

    This will do nothing to ease pump prices but it will fill the government’s coffers. The politicians do love the gravy don’t they?

    That being said EVERY trader who buys/sells oil on the market should be required to take delivery of said oil. That would put an end to the roller coaster prices and millionaire specualtors.

    #9
  10. Christian

    Does it look to anyone as though The President
    and the Feds. are attempting to set our Country
    Up for a Very Desperate Situation?

    #10
  11. NoWhining

    Here’s hoping Obama doesn’t SPEND IT on more !@##!@#@. Wishful thinking.
    Stopped in 2010. 2012 time to end this bad experiment in government.

    #11
  12. eiioi

    Interesting that the energy companies are locked into contracts of $104 to $109 per barrel, when the current price is $95 per barrel. If all this oil is essentially the same as WTI oil, these companies are in effect losing at least $10/barrel. So the average company involved here will be losing $20,000,000.

    #12
  13. Luckyone

    Obama is desperate. He won’t let us produce but will squander our emergency reserves. He is destroying the country.

    #13
  14. NONSENSE

    this doesn’t make sense. 30 million barrels of oil is the amount the U.S. will use in a day and a half.

    #14
  15. chuck

    Just the other day in this same paper was an article stating the oil supplies were as high as they had been in 31 years and many refiners were on reduced capacity due to low demand for gasoline. So what is this going to accomplish? As we saw just this week, the price at some stations was up a nickle to ten cents based on the dollar issues overseas. And why sell to banks to trade? That is one reason prices are so crazy now.

    #15
  16. eiioi

    Matt S, these companies are actually taking a loss, compared to buying oil on the market at today’s prices.

    #16
  17. faithfulflunkie

    Need more than raiding the oil reserves to help with the gas prices. It sure won’t help the economy or those looking for jobs. It probably will only drop the price of gas by a couple of cents. Not enough to make it worth the raid of the oil reserves.

    #17
  18. Lamer

    “Pure idiocy from a president who has never had a job where he was required to actually be productive and who also knows nothing about the market.”

    Like GW and all before him.

    #18
  19. No Name

    What the hell is wrong with this guy?

    #19
  20. wantingbalance

    Although it mentions the name at least six times, no where in this story did the author note that the oil refinery and company by the name of Valero is the Venezula, stated owned oil company confiscated and operated by our dear and close friend Hugo Chavez. As the largest single buyer at 6.1 million barrels, the oil will help Chavez continue to fund his marxist government, including buying nuclear technology from Iran. Thank you Mr. Obama.

    #20
  21. Bruce Wayne

    Nothing to see here folks…just a little smoke and some mirrors…move along or I’ll sick Janet on you!

    #21
  22. luckyone

    Obama is desperate. He won’t let us produce but then releases to increase the supply in the market. I guess Saul Alinksy is advising him. He’s gotta go, we so need a new President!

    #22
  23. cloudwaltzer

    He’s out to make something of himself with anyone BUT America! He would sell America to the devil if he could – that’s how much he really cares – period!!!

    #23
  24. AustinCoog

    I have faith in my President. He is trying to stabilize gas prices and offset the influence of the Commodity Trading Managers and the Hedge Fund Managers. Thank you President Obama.

    #24
  25. J D

    I may be wrong, but I think the Venezuelan oil company is Citgo

    #25
  26. XLR8R

    wantingbalance, Sorry, but you are totally incorrect. The Venezuelan company is CITGO, not Valero. You are obviously just as smart as Obama. DUH!

    #26
  27. Trail Trash

    Once again Obama is putting his campaign needs over the security of our nation.

    #27
  28. eiioi

    wantingbalance, you are mistaken. The company you are thinking of is CITGo, not VALERo.

    #28
  29. Larry

    LMFAO!! Who did you think was gonna buy it??? Venezuela? “It is unclear how each bidder plans to use their oil”. What kind of effed up idiotic statement is that? There gonna make it into Coolaid…what’dya think?? Government interference…everytime the government sticks their noses into something in order to manipulate the market or anything else…it is a fiasco. Next thing you know Obama will be cussing all the oil companies because the price of gas hasn’t gone down to where they think it should have. Effing idiots!!

    #29
  30. jtom58

    Coog,
    You got this one completely wrong. We aren’t seeing any wild fluctuations in oil prices that this would affect.

    #30
  31. jtom58

    Furthermore, like so many other posters have said, this will make us even more energy insecure.

    But I’m guessing that this president doesn’t care. This will probably end up being another “opportunity” that he doesn’t want to waste.

    #31
  32. Signal2Noise

    wantingbalance – you’re showing your ignorance. Valero is a San Antonio-based US corporation. Citgo is the marketing arm of PDVSA.

    #32
  33. Beastman

    They are just going to sit on the oil till prices rise. What this says is that these companies expect the price of oil to rise in the near future. This price may be seen in a few months as a bargain.

    In the end, the SOR will just have to be refilled with oil to repalce taht sold. That oil will cost taxpayers much more.

    This is just the president trying to find a way to get elected to a second term. It is so transparent, cynical, and ultimatly ineffective that no sane person would fall for it.

    #33
  34. pdh42

    Only the LSMedia, Nobama and his lemmings think that selling oil out of the SPR is a good or a wise move…. Anyone with a brain knows that this was one dumb butt move…. Foolish is a kind word for whoever thought this up and agrees with it….

    #34
  35. pdh42

    wantingbalance
    July 11, 2011, 3:09 PM
    Although it mentions the name at least six times, no where in this story did the author note that the oil refinery and company by the name of Valero is the Venezula, stated owned oil company confiscated and operated by our dear and close friend Hugo Chavez. As the largest single buyer at 6.1 million barrels, the oil will help Chavez continue to fund his marxist government, including buying nuclear technology from Iran. Thank you Mr. Obama.

    The company you are thinking of is called CITGO and Not Valero….

    #35
  36. dtschlr

    @AustinCoog-
    You are the only one…..Your President has the brain of a child. He also attempted to create jobs by his glorius stimulus package, we all no what the “shovel ready” jobs were for, the problem is he didnt provide us with any boots. Have Faith AustinCoog, and please don’t vote.

    #36
  37. VERITAS423

    How wonderful! Our government buys oil with tax-payer money and sells it to multi-national corporations to sell back to us at $3.50 per gallon to pay off a debt that was created by the Federal Reserve, out of thin, and at no cost to the Fed.

    “Fascism is the merging of government and corporate power… it should more accurately be called corporatism” -Benito Mussolini

    Welcome to the new Amerika!

    #37
  38. EmSeeDubayou

    @wantingbalance

    Incorrect, you are thinking of CITGO. Do a little research before spouting off.

    My two cents…30.1 M bbls of oil is 5.5 days worth of U.S. production and won’t make much of a dent in creating market stability.

    source: http://www.eia.gov/energyexplained/index.cfm?page=oil_home#tab2

    #38
  39. George

    You have to remember, Obahma is getting advised.

    I read eveyone say this was stupid but hardly an detailed explaination why?

    #39
  40. BOB

    Our communist president is a brilliant man.

    re-elect Obama 2012 for best communist results

    #40
  41. Trail Trash

    George, this is not enough oil to have any kind of significant impact on world oil prices and it will eventually need to be replaced with oil that is even more expensive then that which they are selling. This is nothing more than a political stunt played with a national resource vital to our security in case of a real crisis.

    #41
  42. WTS_MAN

    Hey all its Hurricane Season and I am looking to sell my canned goods and other rations that I have stocked in case of emergency.

    #42
  43. J D

    George,
    I think this is a foolish move because it will do absolutely nothing to affect oil supplies for anything but extremely short term. The purpose of the SPR is for extreme circumstances affecting national security, as in OPEC cutting us completely off. Our reserve is only about a 40 day supply so I see no need for the government to go along with the IEA and use it for this purpose. I’m sure others will feel differently.

    #43
  44. J D

    Lamer,
    LOL, I can’t argue with you on that point. I think Winston Churchill,(or maybe Will Rogers) said “to see the main problem with democracy, just talk to the average voter for a few minutes”.

    #44
  45. Fred

    @George: It’s being done to blunt prices by election time. Everybody knows Obama really well by now. Eveything is designed for reelection.

    The democrat party is responsible for Obama’s election.

    #45
  46. HoustonStreetPunk

    Look at all these stakeholders.

    Too bad the wussification of America has the posting on an internet webpage rather than protesting at congress.

    Take back your country.

    #46
  47. Peter

    WTS_MAN, roflmao. Isn’t that the truth.

    #47
  48. DandyDon_dd

    The Blind Screaming Directions to the Deaf..

    #48
  49. Deepwater Engineer

    I would be glad to drill some deepwater wells and help fill up the reserve, but I am having trouble getting permits………

    #49
  50. BlueJayWay

    Why are “Big Banks” purchasing “crud oil?”
    Why?
    Are these “Big Banks” processing this crud oil, in their refinerys?
    Why are these “Big Banks” allowed to purchase said crud oil?
    Why?

    #50
  51. neutralcarbon

    Another cynical, obviously political decision by His Majesty, President Hopenchange.
    The stockpile is for TRUE emergencies….and the unraveling of your 2nd term chances does not quality

    #51
  52. dishelved1

    Apparently the american people aren’t paying attention.

    #52
  53. donnyappelseed

    They are selling us out too.

    #53
  54. rbright

    Really…1 to on 1 on the downside…You should feel cheated…as you have been

    #54
  55. PaleRider

    Go XOM make – me some money – love those dividends!

    #55
  56. oilpatch41

    wanting balance – get your facts straight. Valero is NOT owned by Venesula, that is Citgo. If you want to make a point be sure of your facts first.

    #56
  57. Frank

    This should be illegal…basically the American people bought the oil with their tax dollars and the fed sells whats not thiers for a profit. I thought our stockpiles were for the people not the large oil companies.. I am losing faith in the way that our government functions.

    #57
  58. Mark Deforlife

    30 million barrels is about 1.5 days supply for the US. Big deal that will make.

    #58
  59. Art Vandeley

    Obama: Selling America’s security to the highest bidder, one barrel of oil at a time. If he was a Repub. he’d be well on his way to impeachment hearings.

    #59
  60. ntangle

    eiioi wrote: If all this oil is essentially the same as WTI oil, these companies are in effect losing at least $10/barrel.
    ————–
    Most WTI is quoted at Cushing, which is land locked. The SPR is more convenient with the big refineries in the Ship Channel and in LA, so the transportation cost should be low.

    #60
  61. wolverine41

    The feds are just going to have to repurchase the same amount oil to refill the reserve. Then what?

    Am I missing something here?

    #61
  62. henry

    Gas prices were high, so Obama earns some sounds byte points by saying he is going to help Americans at the pump by releasing oil reserves to lower prices. By the time the process actually results in oil being put on the market, gas prices have already lowered due to low demand. The gov’t sells its reserves to speculators, who then mark it up and sell it at a slight discount to refiners, and they dump a mediocre amount of oil on the market that does nothing to the price. Just another bad idea motivated by a political agenda.

    #62
  63. paulw

    I think they should nationalize the gas stations and keep all that money here instead of the Pakistani’s owners sending it all to home to fund terrorist. We should also shut off the oil speculators driving up the price with their huge greed. It’s too bad the Repubs sank the legislation that would ended all this speculation mess back in 2008. Look it up. It’s true. And Don’t believe a word you hear on Fox news. It’s all LIES!

    #63
  64. Lomlom

    WOW WOW WOW…is anyone reading this before attacking? It says:

    “The Obama administration announced it was releasing oil from the Strategic Petroleum Reserve late last month — offering up half of the 60 million barrels that the International Energy Agency’s 28 member nation’s committed to put on the market. Administration officials said the move was essential to restoring stability to the market and offsetting the loss of 1.5 million barrels of high-quality light, sweet crude oil daily from Libya during the summer driving season”

    ALSO you folks really think of the now, forgetting you cannot plan for future without thinking of the FUTURE. If Libya falls tomorrow, who gets first dibs? huh? That’s 1.
    2: Twenty-eight nations (28) agreed on this process for 61M barrels and you can guess correctly who probably has the most reserve (not china!)? Reserve just sitting there not being used because…well we keep buying at no matter what price..so the govt sells it to make money and we complain?
    3: No matter what you think or how you can personally run this country if you were president, just know America leads by example and so has been her history since birth. No matter what you think you can change, this is a nation that takes risk and sometimes it pays positive and sometimes negative; but it is a cycle and she will always prevail.

    #64
  65. pescador

    I’ve always thought these oil reserves should be used as a hedge against the oil cartels, (be it OPEC or ExxonMobil). These crooks and despots have reeked havoc on world economies since the 70′s.

    #65