Strategic Petroleum Reserve Proves Strategy Works
The Strategic Petroleum Reserve (SPR) is the worlds largest supply of emergency crude oil. It was established by President Ford primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program. The federally-owned oil stocks are stored in huge underground salt caverns at four sites along the coastline of the Gulf of Mexico. The sheer size of the SPR (authorized storage capacity of 714 million barrels) makes it a significant deterrent to oil import cutoffs and a key tool in foreign policy.
SPR oil is sold competitively when the President finds, pursuant to the conditions set forth in the Energy Policy and Conservation Act (EPCA) that a sale is required. Such conditions have only existed three times, most recently in June 2011 when the President directed a sale of 30 million barrels of crude oil to offset disruptions in supply due to unrest in Libya. During this severe energy supply interruption, the United States acted in coordination with its partners in the International Energy Agency (IEA). IEA countries released altogether a total of 60 million barrels of petroleum.
The US saw a $4 Billion windfall from sales in 2022 with an average sale price of $96.25 per barrel significantly higher than purchases.
Crude oil has now dropped below $75 barrel (December 1, 2023) and the US began making significant purchases to replinish the reserves.
Multiple awards were made to US companies on December 1, 2023.
More purchases are planned through January.