The US Strategic Petroleum Reserve (SPR) was established in 1975. The goal of this law was “to reduce the impact of severe energy supply interruptions.” The SPR consists of four sites with underground storage caverns along the Texas and Louisiana Gulf Coasts.
Why Do We Need the SPR:
The implications of the 1973 OPEC oil embargo weighed heavily on the implementation of SPR. The OPEC oil embargo was a result of 12 countries that made up OPEC at that time stopped selling oil to the U.S. Gas prices skyrocketed, and between 1973 and 1974, the prices more than quadrupled. As of December 1984, the level in the SPR reserve has never reach lower than 450 million barrels. That is, until now!
Supply and Demand:
- The SPR oil can be pumped at a maximum rate of 4.4 million barrels per day for up to 90 days. At 1 million barrels per day, releasing oil into the market could last approximately 1 ½ years.
- In 2005, the U.S. imported 1 million barrels per day of crude oil, which covered 68 days of supply. 4.8 million barrels per day came from SPR.
- In 2021, the U.S. imported 1 million barrels per day and reduced to 800,000 barrels per day from the OPEC.
- March 2022, President Biden release 1 million barrels of crude oil a day for 6 months coming from the SPR reserve in attempts to decrease gas prices.
- With the U.S. producing 12 million barrels per day with this extra 1 million barrels per day pushed the total to all-time pre-Covid high of 13 million barrels per day.
A few more stats:
% From OPEC
Some argued that Biden’s attempts to tame gasoline prices contradicts key objectives of reducing carbon emissions. Since Biden has been in office, the SPR went from 640 million barrels to 450 million barrels. History has proven that SPR volume grows during a Republican being in office while falling during a Democratic admin. This has been a consistent pattern since 1980.
The Continued Mission:
The SPR is ready in the case of a natural disaster or national emergency. Their goal is continued energy security for the U.S. The SPR is critical for the U.S. to meet its International Energy Agency obligation to maintain emergency oil stocks. According to the Energy Information Administration, the U.S. is expecting 12.85 million barrels per day of US Production in 2023. Many feel the SPR will surely need to replenish.