Oil - Strategic Petroleum Reserves

In 1923 the Warren G. Harding administration set up the Petroleum Reserve to ensure that the U.S. Navy would have adequate fuel in the event of war. In 1975, in response to the growing concern over America's energy dependence, Congress turned the Strategic Petroleum Reserve (SPR) over to the Department of the Interior under the Energy Policy and Conservation Act (PL 94–163). An additional law, PL 101–383, expanded the SPR and created a second reserve for refined products.

SPR oil is stored in deep salt caverns located at four storage sites in Louisiana and two in Texas. (Oil does not dissolve salt the way water does.) Each site's caverns vary in capacity, but most can hold approximately 10 million barrels of oil. The SPR system currently has forty-one such caverns. If the United States suddenly found its supplies cut off, the reserve system would be connected to existing commercial lines that would start pumping the oil.

At the end of 2003 the SPR contained 638 million barrels (see Figure 2.12), enough to equal fifty-seven days of imported oil should the supply be cut off (see Figure 2.13.) The SPR increased in 2002 and 2003 due to the importation of sixty-four million barrels of crude oil for this purpose. Figure 2.13 shows a decline in the reserves, from a high of 115 days in 1985 to the current fifty-seven days. This decline is the result of two major factors:

1. It reflects the increase in imports since 1985. As the nation has imported a greater amount of oil, the days of import replacement represented by the amount of oil in the SPR have dropped.
2. It reflects a real decline in quantity. In 1996–97, millions of barrels of oil were sold (at a loss of $10 a barrel or so) to help balance the federal budget. Also, oil was withdrawn from the reserves at the start of the Persian Gulf War in 1990–91. In September 2000 President Clinton authorized the release of 30 million barrels of oil to bolster oil supplies, particularly heating oil in the Northeast.