What is the Strategic Petroleum Reserve and how does it work? Here’s what we know about it.
What is the Strategic Petroleum Reserve?
The Strategic Petroleum Reserve is the country’s emergency stockpile of oil.
Where is the stockpile kept?
The oil is kept in deep underground storage caverns created in salt domes at four sites:
The Bayou Choctaw storage site is in Iberville Parish, Louisiana, around 12 miles southwest of Baton Rouge. According to the Department of Energy which manages the oil, the site was acquired in April 1977 and became operational in 1987. Bayou Choctaw has six storage caverns, an authorized storage capacity of 76 million barrels and a cavern inventory of 60.1 million barrels.
The Big Hill storage site is in Jefferson County, Texas, approximately 26 miles southwest of Beaumont, Texas. The site was acquired in November 1982 and July 1983 and became operational in 1991. Big Hill has 14 storage caverns, an authorized storage capacity of 170 million barrels and a cavern inventory of 129.9 million barrels.
The Bryan Mound storage site is in Brazoria County, Texas, 3 miles southwest of Freeport, Texas. The site was acquired in April 1977 and became operational in 1986. Bryan Mound has 19 storage caverns, an authorized storage capacity of 247.1 million barrels and a cavern inventory of 218.2 million barrels.
The West Hackberry storage site is in Cameron Parish, Louisiana, approximately 25 miles southwest of Lake Charles, Louisiana. The site was acquired in April 1977 and became operational in 1988. West Hackberry has 21 storage caverns, an authorized storage capacity of 220.4 million barrels and a cavern inventory of 180 million barrels.
How much oil is in the storage areas now?
As of March 25, 2022 there were 568 million barrels of oil held in the reserve, according to the Department of Energy.
Biden on Thursday authorized the release of 180 million barrels of that oil, or nearly a third of current supplies. The release of 180 million barrels would drop the reserve to its lowest level (388 million barrels) since 1984.
Why do we have a strategic petroleum reserve?
The energy crises of the 1970s led to the idea of having a national supply of oil in case of an emergency such as war or natural disasters.
After the 1973 oil crisis when an embargo was placed on oil coming to the U.S. from Middle Eastern countries, President Gerald Ford created the reserve by signing the Energy Policy and Conservation Act in 1975. The act authorized the country to store up to 1 billion barrels of oil.
How much oil does the U.S. use in one day?
The United States consumes about 20 million barrels of oil a day.
Will the release of the 180 million barrels make a difference in gas prices at the pump?
According to Patrick De Haan of GasBuddy.com, releasing the oil will help temporarily, but the relief will be modest.
“I think most Americans are hoping for long term significant relief at the pump,” De Haan told USA Today. “This is not going to bring the relief millions of Americans are hoping for. And that’s because 180 million barrels is less than two days of global consumption.”
De Haan said he believes the most that a release of 180 million barrels from the reserve can drop gas prices by is 30 cents.
“And don’t run with the 30 cents, because that’s probably the least possible,” De Haan said. “Maybe somewhere in the 10 to 20 cent range, and it could be temporary.”
When has the reserve been tapped before?
The U.S. releases fuel from the reserve at various times such as before Hurricane Katrina and Hurricane Gustav hit, and during the Gulf War.
Should you use the oil from the reserve?
The oil is there for an emergency, which is what some consider the current price of gasoline to be. Others do not.
On the downside, the cost of replacing the oil will be great. The oil currently being stored was purchased at an average cost of $29.70 a barrel. On Friday, the average cost for a barrel of oil was around $102 a barrel.
How long does it take to get the oil released?
It can take around 13 days from a presidential decision for the first oil to enter the country’s market.
How do you get the oil out of the ground once it is released for use?
From the Department of Energy: “The fact that oil floats on water is the underlying mechanism used to move oil in and out of the SPR caverns. To withdraw crude oil, fresh water is pumped into the bottom of a cavern. The water displaces the crude oil to the surface. After the oil is removed from the SPR caverns, pipelines send it to various terminals and refineries around the nation.”
What are the reserves and the storage system worth?
The investment for the system and oil to date is around $25.7 billion. That equates to $5 billion to build the storage facilities and $20.7 billion for crude oil.
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