As US president, Joe Biden has a rarely used but potentially powerful tool to make up for energy supply shortages or economically damaging price spikes: the Strategic Petroleum Reserve, or SPR. Set up in the aftermath of the Arab oil embargo in the 1970s as a national energy safety net, it’s the world’s largest supply of emergency crude, stored in deep and heavily guarded underground salt caverns along the US Gulf Coast. Fighting rising gasoline prices, the Biden administration is in the midst of the largest SPR release ever.
1. How much of the SPR is being tapped?
About 165 million barrels of crude oil has been delivered or put under contract since the spring, when Biden initiated a drawdown of up to 180 million barrels. On Oct. 19, Biden announced that the final tranche of 15 million barrels will be released. He also held open the possibility of “further releases in the months ahead if needed.” The White House has been seeking to ease rising costs at the pump and bolster low domestic stockpiles of fuel for the winter while also responding to the decision by the world’s largest suppliers of oil, a group known as OPEC+, to slash production.
2. How much oil remains in reserve?
The reserve stood at 405.1 million barrels as of Oct. 14. That’s about 57% of its maximum authorized storage capacity of 714 million barrels and enough to replace more than two years’ worth of US crude net imports, based on 2021 figures. Replenishing the SPR is also on the Biden administration’s to-do list, with one senior official saying purchases will begin when West Texas Intermediate crude prices are at or below $67 to $72 per barrel.
3. In what circumstances can presidents release stockpiled oil?
It’s pretty much the president’s prerogative. The 1975 law that established the reserve says a president can order a full drawdown in the event of a “severe energy supply interruption” that threatens national security or the economy. A limited drawdown (up to 30 million barrels) can be ordered in the event of “a domestic or international energy supply shortage of significant scope or duration.”
4. How have presidents tapped the reserve?
Beyond ad hoc responses to localized oil disruptions, the US had tapped its oil reserve only a handful of times before 2022. Biden did so late in 2021, authorizing the release of 50 million barrels as part of a coordinated multi-nation bid to lower surging fuel costs. In 2011, President Barack Obama released 30 million barrels as part of a joint effort with other nations to counter supply disruptions from Libya. In 2005, President George W. Bush released 11 million barrels in the wake of Hurricane Katrina. And in 1991, under President George H.W. Bush, 17 million barrels were released during the first Gulf War. In 2017, the Energy Department authorized the release of 5 million barrels to Gulf Coast refineries when Hurricane Harvey wreaked havoc on the region. Such arrangements are designed to address short-term emergency needs, and the crude is repaid, in kind, at a future date. Test releases take place from time to time, as well as limited releases in the form of swaps.
5. What does a release entail?
The maximum drawdown capability is 4.4 million barrels a day, according to the Energy Department’s website, and it takes 13 days for SPR oil to reach the open market after a presidential decision.
6. Which other countries have reserves?
China, India, Japan and South Korea are among Asia’s major stockpilers of oil. Member states of the European Union held a combined 103.6 million tonnes (759 million barrels) of emergency oil stocks as of July 2022, according to Eurostat, the EU’s statistical office.
7. What’s the outlook for the US stockpile?
The domestic shale boom has allowed the US to join the ranks of the world’s biggest oil producers, lending weight to arguments that the emergency reserve is past its sell-by date. But US crude production has only grown modestly this year, despite a big rally in prices, while demand has increased and imports have been trending upward. Periodic use of the reserve after natural disasters may be the most effective rebuttal to the case for doing away with it.
–With assistance from Jennifer A. Dlouhy.
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