US Strategic Petroleum Reserve Gets Topped Up
The US Strategic Petroleum Reserve (SPR) recently reached its lowest level since the early 80s, a time before most of the ENERGYminute staff (and maybe even Cody’s parents) were born. But US President Joe Biden started to refill the reserve this week like it was a bottomless margarita.
What happened: The Biden administration announced it would seek to add 3 million barrels of oil to the SPR — America’s stockpile of rainy-day oil — in August, with a purchase from a yet-to-be-determined lowest bidder.
- The SPR currently sits at 362 million barrels of oil, or just over half its potential. It was drawn down steadily in early 2022 from nearly 600 million barrels in an effort to steady oil prices after Russia’s invasion of Ukraine.
Compared to the SPR’s total capacity of 714 million barrels of oil, adding another 3 is barely a drop in the
bucket barrel, and only represents about 15 percent of daily oil consumption in the US. But like drinking bottomless margaritas, it’s slow and steady that will win this race.
False start: The announcement marks the second time the Biden administration has tried to start refilling the oil stockpile in the last six months after a plan to add 3 million barrels last December fell through.
- Biden is dancing a delicate ballet in trying to build up America’s oil stockpile when prices dip, while avoiding sending markets into a frenzy.
It’s no Elon tweet, but the announcement of a mere 3 million barrel addition was enough to boost oil prices by half a percent yesterday.
Zoom out: It’s going to take years to restock the SPR to 2021 levels, especially in 3-million-barrel increments and only when “the price is right”. Until then, there’s a collective finger-crossing that an unforeseen emergency doesn’t give reason to drain the SPR even further.
Small sips only.