(KERO) — President Joe Biden is again dipping into the nation’s petroleum stockpile to try to corral rising energy prices. The White House announced Thursday that Biden ordered the release of 1 million barrels of oil per day from the strategic petroleum reserve for the next six months.
The administration hopes that tapping the petroleum reserve will buy time and tamp down gasoline prices long enough until domestic producers can boost output. It's the third time Biden has turned to the strategic petroleum reserve in a little over four months.
Tapping the reserve is among the few things a president can do alone to try to control inflation. But what is the strategic petroleum reserve?
According to the Office of Fossil Energy and Carbon Management:
The Strategic Petroleum Reserve (SPR), the world's largest supply of emergency crude oil was established 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.
Additionally, the Secretary of Energy may authorize limited releases in the form of exchanges with entities that are not part of the Federal Government. This authority allows the SPR to negotiate exchanges where the SPR ultimately receives more oil than it released; thereby acquiring additional oil. With the exception of the 2000 Heating Oil Exchange, the SPR has entered into negotiated contracts at the request of private companies in order to address short-term, emergency supply disruptions to a refiner's normal operations on several occasions.
Highest inventory - The SPR was filled to its then 727 million barrel authorized storage capacity on December 27, 2009; the inventory of 726.6 million barrels was the highest ever held in the SPR.
Current inventory - NOTE: At the time this story was written, the current inventory was not available.
Crude Oil Storage by Site (as of January 26, 2022)
- Bryan Mound - holds 218.2 MMB in 20 caverns - 66.6 MMB sweet and 148.8 MMB sour.
- Big Hill - holds 129.9 MMB in 14 caverns - 65 MMB sweet and 65.1 MMB sour.
- West Hackberry - holds 180 MMB in 22 caverns - 102.2 MMB sweet and 77.5 MMB sour.
- Bayou Choctaw - holds 60.1 MMB in 5 caverns - 18.9 MMB sweet and 41.9 MMB sour.
Current authorized storage capacity - 714 million barrels
Average price paid for oil in the Reserve - $29.70 per barrel
- Maximum nominal drawdown capability - 4.4 million barrels per day
- Time for oil to enter U.S. market - 13 days from Presidential decision
You can find additional facts about the strategic petroleum reserve online.