RESTON, Va. -- The Society of Independent Gasoline Marketers of America (SIGMA) recently sent a letter to U.S. Secretary of Energy Samuel W. Bodman asking that the National Petroleum Council (NPC), the energy secretary's oil and natural gas advisory committee, study the feasibility of the establishment of a national strategic reserve for gasoline, diesel fuel and jet fuel.
In part, the letter says:
Numerous questions persist as to how such a reserve would actually work. There are significant differences between gasoline and other [image-nocss] motor fuels and crude oil which would make the storage of motor fuels in a reserve more complicated than the storage of crude oil in the SPR. Unlike crude oil, many motor fuel qualities degrade over time and cannot be stored indefinitely. The SGR would have to be actively managed in order to ensure that the products in a motor fuel reserve maintain their chemical properties. This raises a number of logistical questions such as:
Would such a reserve be feasible, given the degradation of motor fuel characteristics over time? Who would "own" the product in the reserve? Who would be responsible for actively managing the reserve to ensure that inventories remain in good condition for sale to consumers in the event of a supply emergency? Under what circumstances could products from the reserve be drawn down and who would have the authority to direct such removals? Which of the many different grades and formulations of motor fuels, including summer and winter fuel blends, required throughout the country and at different times of the year would be stored in the reserve? What effect will these different factors have on the supply and price of motor fuelcould such a reserve actually exacerbate supply disruptions and price volatility by removing supply from an already tight market? What impact would the existence of such a reserve, and the potential politicization of additions to and withdrawals from the reserve, have on price volatility in motor fuel markets and the markets' response to motor fuel supply shortages?Click here to read the full letter on SIGMA's website.
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