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How is the release of Strategic Petroleum Reserve (SPR) oil following a natural disaster such as Hurricane Katrina treated in the NIPAs?
In the days following the disaster, President Bush announced that oil would be released from the SPR to mitigate the effects of reduced oil production because of damage to Gulf Coast region facilities, such as oil rigs, pipelines and refineries. These transactions are treated as a sale from the SPR to the oil companies which will result in a decrease in consumption expenditures. Within the NIPAs, sales are deducted from consumption expenditures; therefore, an increase in sales results in a corresponding decrease in consumption expenditures. However, because the oil that the government sells enters into private inventories, the sale has no direct net effect on GDP.
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