The Strategic Petroleum Reserve is at its lowest point since 1983. What is it?
America's emergency stockpile of oil needs a refill. The Strategic Petroleum Reserve dropped to its lowest point since the early summer of 1983, when it was still in its early stages. The latest data shows it's at 331.2 million barrels of oil.
There's a chance the gas you just pumped into your car was made with oil from America's emergency stockpile. Not because our country is suddenly low on fuel. It's to slow the eye-popping ascent of prices due to the war with Iran.
"The strategic reserve was created after the Arab oil embargo back in the late 1970s and it's been the source that America has turned to during times of disruption," said Patrick De Haan, lead petroleum analyst with Gas Buddy.
According to the U.S. Department of Energy, the embargo triggered a recession in the United States. Creating the SPR was a backup plan to prevent future market impacts from worldwide disruptions. That includes weather events, technical failures, political disputes and wars.
The decision to withdraw oil from the SPR typically comes from the president. The oil is either sold at an auction or loaned to mostly non-government entities like refineries. The amount of oil loaned is returned to the SPR along with an additional quantity.
Eleven million barrels were released in 2005 after Hurricane Katrina damaged pipelines and refineries. When Russia invaded Ukraine in 2022, President Joe Biden authorized 180 million barrels to be released.
This March, President Trump ordered 172 million barrels to be released. He took that action after Iran retaliated by choking off the Strait of Hormuz, causing one of the worst energy crises in history.
Prices at the pump soared, reaching over $4.50 as a nationwide average in May.
When asked if the cost of gas would have been even higher had the SPR not been tapped, De Haan said, "It is some impact, and it certainly wouldn't make prices higher by releasing this oil."
The oil is stored at several sites along the Gulf Coast between Texas and Louisiana. The SPR started with about 270 million barrels in 1982. It reached a peak of more than 726 million barrels in 2011. As of June 22, it's at 331.2 million barrels, less than half its capacity.
The recent drawdown is only part of the reason the SPR is at such a low point. Why else has it been drained? Mainly to make money.
"Congress and President Trump in his first term agreed to sell it down starting in 2017 to use the additional funding to balance the budget," said De Haan.
From 2017 to 2023, Congress helped authorize 10 sales from the SPR. About 140 million barrels were sold during that span. It started rising again in late 2023 until the Iran War started this year.
"After this is all said and done, there is the distinct possibility that the U.S. may try to completely refill its reserves as countries would do, correcting a problem, refilling them. So, there may actually be more global oil demand after this," said De Haan.
Mr. Trump said the oil he released will be replaced with 200 million barrels over the next year. However, with hurricane season approaching, it's possible the reserve could be tapped again.
