Summary: The government-owned and operated Naval Petroleum Reserve (NPR) in Elk Hills, California--the seventh largest oil field in the lower 48 states--generated oil sales revenues of $327 million in 1992. The Energy Department (DOE) sells most of this oil to California refiners through competitive bids. The prices received by the government for this oil have been lower than prices for crude oil in other parts of the country. GAO concludes that it will be difficult for DOE to boost revenues from NPR oil sales by selling oil to Gulf Coast or midcontinent oil refineries because this oil is of lower quality than other available crudes and shipping costs are high. This report explores other ways that DOE may be able to increase revenues. For example, DOE bills its customers more often than private oil producers do, resulting in buyers making lower bids to compensate for the higher administrative costs. DOE also does not market its oil as aggressively as private producers do. GAO also discussed (1) the relative priority that should be given to several options for improving the readiness and expansion of the Strategic Petroleum Reserve and (2) the evolving mission of the International Energy Agency.
