Naval Petroleum Reserve

Opportunities Exist to Enhance Its Value to the Taxpayer Gao ID: T-RCED-95-136 March 22, 1995

This testimony focuses on ways to enhance the profitability of the Naval Petroleum and Oil Shale Reserves. Regardless of what alternative is finally adopted for the Naval Petroleum and Oil Shale Reserves, GAO believes that the goal should be to protect the interests of taxpayers by getting a reasonable return on these assets. If a decision is made to form a government corporation, care should be taken to establish a financially sound corporate entity with as few government restrictions on earning profits as is possible. If a decision is made to sell the reserves, the government must ensure that it receives fair market value for them. Steps can be taken now, such as giving the Energy Department more flexibility to set the rate of production so as to maximize profits and marketing Elk Hills oil more aggressively, that would be compatible with any more fundamental management changes.



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