Refilling the U.S. strategic petroleum reserve (SPR) after President Joe Biden’s significant depletion in 2022 might take several decades, as reported by Bloomberg News.
The administration’s efforts to considerably restock the SPR are hindered by aging infrastructure, increased oil prices, and budgetary limitations. According to Bloomberg, this follows Biden’s decision to draw from the reserve to mitigate surging energy prices before the 2022 midterm elections.
The immense salt caverns which store the SPR oil are currently only half-filled, and given the present circumstances, restoring them is not a simple task. Experts predict that the process may last decades, reports Bloomberg.
John Shages, a former manager of the Department of Energy’s (DOE) SPR, emphasized the task’s difficulty, even under ideal conditions. “Even with sufficient funding and well-maintained facilities, the process would be significantly slow,” Shages noted, “It could indeed take decades,” as per Bloomberg.
As of December 2022, Politico reports that President Biden had approved the release of more than 211 million barrels to mitigate the surge in oil prices following Russia’s invasion of Ukraine. These releases exceeded any previous ones by nearly five times. To restore the SPR to its 2009 levels would necessitate the purchase of at least 300 million barrels, Bloomberg estimates.
The SPR is currently at its lowest in approximately four decades, which increases the U.S.’s susceptibility to price surges in the global oil market, as noted by Bloomberg. The SPR was established in 1975 by then-President Gerald Ford in response to the OPEC embargo on exports to the U.S., which resulted in a national energy crisis, according to the Department of Energy (DOE) website.
As reported by Bloomberg, there’s a lack of agreement about the ideal target levels, notes Benjamin Salisbury, research director at Height Capital Markets. He questions, “Do we genuinely want to invest $7 billion or $8 billion to replenish the SPR if we can still produce our oil effectively?”
With 346.8 million barrels presently available, it’s sufficient to cover roughly 18 days of activity during a crisis, Bloomberg suggests. According to Bloomberg, as the OPEC+ nations plan to reduce production, the challenging and lengthy path to refill the reserve further threatens U.S. energy security.
When the reserve was established in the late 1970s to safeguard against international market manipulation by hostile nations, the price per barrel was approximately $30, Bloomberg reports. However, the ongoing contract price for Brent crude oil futures was nearly $79 per barrel when this report was published, according to MarketWatch.