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It may take decades to refill the U.S. strategic petroleum reserve (SPR) after President Joe Biden released unprecedented amounts from its supply in 2022, according to Bloomberg News.
Biden authorized the release of over 211 million barrels as of December 2022 to counter spiking oil prices in the wake of Russia’s invasion of Ukraine, according to Politico. As a result, draining the reserves to about half of capcity and the lowest levels since the 1980s while it was still being filled. As of June 30, the reserve had 347 million barrels of oil. The U.S. started the year with about 373 million barrels. The reserve had about 638 million stockpiled at the start of 2021.
“It would be a very slow process even if you had the money and the facilities were are all in good shape,” said John Shages, a former Department of Energy (DOE) SPR manager, to Bloomberg. “It could take decades.”
There is not much consensus regarding the appropriate target levels, said Benjamin Salisbury research director at Height Capital Markets. “Do we really want to spend $7 billion or $8 billion to refill the SPR if we are still perfectly capable of producing our own oil?”, Salisbury told Bloomberg.
According to Bloomberg, refilling the SPR to its 2009 capacity would require at least 300 million barrels. The 346.8 million barrels currently on hand is enough to supply the US for about 18 days of activity in a crisis. Even at full capacity, the SPR holds about 36 days of supply.
Executive Producer for Money Morning, Garrett Baldwin, warned that “there is danger ahead” and that we are headed for a “massive petro-disaster”. Baldwin warned that having reserves this low puts America’s national security in grave danger and that if there were to be a national crisis, it would make us more dependent on countries like Russia.
Baldwin also warned that if there was another inflation wave, reserves this low could result in another 1970s situation.
According to the Department of Energy’s website, “President Ford set the SPR into motion when he signed the Energy Policy and Conservation Act (EPCA) on December 22, 1975. The legislation declared it to be U.S. policy to establish a reserve of up to one billion barrels of petroleum”. The first shipment of oil to the new reserves was on July 21, 1977.
