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RCED-85-80 1 (1985-06-05)

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BY THE COMPTROLLER GENERAL

Report To The Chairman, Subcommittee On

Fossil And Synthetic Fuels,

Committee On Energy And Commerce,

House Of Representatives

OF THE UNITED STATES




Evaluation Of The Department Of Energy's

Plan To Sell Oil From The Strategic

Petroleum Reserve


The administration plans to reduce the effects of a
severe oil supply disruption by selling oil from the
Strategic Petroleum Reserve (SPR). Under a Depart-
ment of Energy (DOE) plan, the oil would be sold at
periodic auctions, with sales contracts awarded to
the highest bidders. All interested parties who agree
to DOE's contract terms and conditions would be
eligible to bid.

GAO's evaluation of DOE's plan addressed (1) its
potential effects on world oil prices, (2) issues
affecting who would get SPR oil under this plan, and
(3) how the plan compares with alternative sales
mechanisms.

GAO found that the plan's market approach would,
as intended, probably limit oil price increases in a
severe supply disruption and would allow broad
participation in the sale. Nevertheless, GAO iden-
tified some potential problems relating to buyer
participation under the plan.




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                                                 GAO/RCED-85-80
                                                   JUNE 5, 1985

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