The Strategic Petroleum Reserve (SPR) is an emergency stockpile of petroleum maintained by the United States Department of Energy (DOE). It is the largest publicly known emergency supply in the world, with underground tanks in Louisiana and Texas. Strategic petroleum reserves are emergency crude stockpiles stored to support economic activity in the event of a supply disruption. There has been no actual supply disruption, only extreme high prices resulting from Biden Administration policies.
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.
At its high point in 2010, the US Strategic Oil Reservev reach 726.6 million barrels. Since December 1984, the level has never been lower than 450 million barrels — until now.
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. This depletion is consistent with recent history. Historically SPR volumes tended to grow during Republican administrations and to fall during Democratic administrations. That pattern has held true since 1980.
Presidents Clinton and Obama both used the SPR to try to ease high gasoline prices around election time, while Republican presidents (until Donald Trump) added to the SPR. President Trump drew down about 10% of the SPR during his term.
President Biden has announced steps to replenish the SPR, “likely after FY2023”, and in my opinion most likely after the 2024 elections. President Biden’s gamble to deplete the SPR in order to fight high oil prices may not hurt him at all. Of course, if for some reason we had a true supply emergency and found ourselves needing that oil, it would be looked upon as a terrible decision.