How Big A Problem Is America’s Shrinking Strategic Oil Reserve?

Oil Price ^ | 09/24/2022 | Robert Rapier

[SeekAndFind]

• The Strategic Petroleum Reserve, which was established in 1975 as a reaction to the 1973 oil embargo, is now at its lowest level since December 1984.
• Ultimately, the SPR is not as important today as it was in the past, in large part that is because the U.S. is no longer heavily reliant on oil imports.
• Historically the SPR tends to grow during Republican administrations and fall during Democratic administrations, although it did fall by 10% under Trump.

What is the U.S. Strategic Petroleum Reserve (SPR)? What are the implications of depleting the SPR, which the U.S. has been doing now since 2016? Further, what has been the impact of the rapid drawdown of the SPR that has taken place this year? Let’s discuss.

SPR 101

In December 1975, with memories of gas lines fresh on the minds of Americans as a result of the 1973 OPEC oil embargo, Congress established the Strategic Petroleum Reserve (SPR). The law was designed “to reduce the impact of severe energy supply interruptions” such as that caused by the embargo. Over time the U.S. government began to fill the reserve. At its high point in 2010, the level reach 726.6 million barrels. Since December 1984, the level has never been lower than 450 million barrels — until now.

[E. Pluribus Unum]

It’s depletion is to reduce the price of gasoline before the November elections.

After that, the sky is the limit.

[SeekAndFind]

On March 31, 2022 — in an attempt to fight higher oil and gasoline prices — President Biden announced the release of one million barrels of crude oil a day for six months from the SPR.

I remember when I first heard about it, I thought “Wow. That’s a lot.” In fact, I noted in interviews at the time that this level of release would likely help stem oil prices — at the risk of depleting our insurance policy in case of a supply disruption.

Consider that with the U.S. producing 12 million BPD, an extra one million BPD pushes total U.S. “supply” (which isn’t sustainable, because it relies on depleting the SPR) back up to the all-time pre-Covid high of 13 million BPD.

Ultimately, drawing down the SPR was a political decision. Think about it. An administration that has frequently emphasized the importance of reducing carbon emissions is trying to increase oil supplies to bring down rising oil prices — which will in turn help keep demand (and carbon emissions) high.

But even though the Biden Administration wants to address rising carbon emissions, high gasoline prices cause incumbents to lose elections. So, they try to tame gasoline prices even though it contradicts one of their key objectives of reducing carbon emissions.

The SPR has now been depleted since President Biden took office from 640 million barrels to 450 million barrels.

[Nifster]

It doesn’t have enough barrels to accomplish that

Prices will go down because it’s fall and the summer demand is over

[ChildOfThe60s]

Prices have gone down because of demand destruction. It’s no more complicated than that

The administration’s goal is to deplete the Strategic Reserve to the point that in a genuine crisis we will be screwed

[Governor Dinwiddie]

What an asshole Biden is. President Trump filled up the SPR to be used for its intended purpose: national security. Dementia Joe sold it off to buy votes and buy ChiComs. And Biden isn't even the real President.

Biden is part of the socialist junta which seized power illegally. No one is actually sure who is running the country. Biden is just their puppet.

[hflynn]

No problem at all. The United States military is transitioning to green. I wonder how long it takes to charge and aircraft carrier?

[SeekAndFind]

RE: Prices have gone down because of demand destruction.

Yes. Two main reasons:

1) Release of Oil from the SPR

2) Demand Destruction due to Recession ( despite Biden and company trying to deny it ).

[Magnum44]

They played that card to early. Gas is headed back up now. Up 50 cents per gallon where I am just this week.

[Owen]

In the context of the SPR purpose, to supply the US in an emergency, be aware that yes, it currently holds 472 million barrels, but it can only drain at a rate of 4.4 million barrels/day.

The US consumes 20 mbpd. If production were stopped (12.9 mbpd) maybe via sabotage or bombing (that’s what an emergency is, remember?), the 4.4 mbpd would provide only 20% of US needs. This doesn’t mean you get 80% somewhere else. It means you live with 20% of what you were consuming. That would end the US. Food transport would never be evenly distributed.

Would you like less of an emergency? Okay, 12.9 produced and 20 consumed. So 7 mbpd imported, and maybe that gets stopped. So only 4.4 of the 7 would be available.

This ain’t like running out of money. You can’t get the Fed to print up some oil to pay for food transport. You run short of oil, people die. Simply that. Food doesn’t get to their local Walmart shelves and they die.

[hardspunned]

No problem for Biden at all. He can nurse it along and not run it dry until after Election Day.

[where's_the_Outrage?]

What are the implications of depleting the SPR, which the U.S. has been doing now since 2016? I'm positive I remember that Trump replenished these reserves making this a false statement.

[Its All Over Except ...]

Bkmk

[chajin]

It’s only a problem in the sense that we have to wait for President Trump or DeSantis to open up the means of production, and then refill the reserve with lower-priced petroleum.

[Presbyterian Reporter]

“””Historically the SPR tends to grow during Republican administrations and fall during Democratic administrations, although it did fall by 10% under Trump”””

---

Thanks for posting the chart of SPR inventories.

If I recall correctly, the Congress was unwilling to appropriate the money for Trump to add to the SPR inventory.

[Irish Eyes]

This could be a huge problem. biden will continue to drain the reserves and at the same time is talking about war in Ukraine and Russia. He is also talking about defending Taiwan.

[jz638]

I'm positive I remember that Trump replenished these reserves making this a false statement.

Take a look at the chart in the first few comments, he added to it, but it was a small blip and not as much as he wanted to. Trump wanted to top up the SPR, but the dems in congress wouldn't allow the money to be allocated (I think it was something like 3 billion when oil was in the 20-40 dollar a barrel range.) Amazing how they couldn't find a few billion here and there for republican priorities to benefit the US, but 60 billion to get laundered through US defense contractors for Ukraine is right there for the taking.

[SeekAndFind]

RE: If I recall correctly, the Congress was unwilling to appropriate the money for Trump to add to the SPR inventory.

Trump wanted to add to the SPR when Oil was $24 a barrel ( that was during the pandemic ). Now, it is about $85 a barrel !

[UMCRevMom@aol.com]

[miserare]

A very sobering post.

No oil, no electricity.

No electricity, no iphones, laptops, tv, etc. etc.

The teenagers will go absolutely berserk if they cannot recharge their devices.

They will kill their parents, and then rampage in the streets.