US Can Keep 714 Million Barrels Of Oil In Underground Salt Caves
There are at least two reasons Americans should believe that a drop in global oil supply will not significantly damage the US economy. The first is that America is a net producer of both oil and natural gas. The other is the Strategic Petroleum Reserve (SPR), which can store up to 714 million barrels of oil. When it is used to help US energy needs or to drive down global oil prices, it is sometimes tapped, but by modest amounts at any given time. Drawdowns over the years have dropped this level to just above 400 million barrels.
The (SPR) is stored in a massive salt cave in four areas. It was created in 1975, when President Gerald Ford signed the Energy Policy and Conservation Act (EPCA).OPEC stopped providing the US with oil in 1973 and 1974. US production was not enough to offset that, so gas and oil prices soared. At the time, the SPR was described as “a significant deterrent to oil import cutoffs and a key tool in foreign policy.”
The SPR has been located close to major US refineries, which allows it to be put on the market quickly. They include refinery hubs in Houston, Texas City, Freeport, Beaumont-Port Arthur, Lake Charles, and New Orleans. The SPR has also built its own pipelines in the areas, allowing it to bring new oil online in a matter of weeks. And, realizing this is a deterrent to a global conflict, which involves a drop in supply in and of itself,
Oil has been released from the SPR in large quantities only 5 times. The first was during Operation Desert Storm in 1991. Another was during Hurricane Katrina (2005). Each of the next two was part of a larger international reserve drawdown. One of these was in 2011, and the other in 2022. Only the President can authorize these drawdowns.
The most recent of the five was President Trump’s decision last month to release 172 million barrels. It was part of a coordinated effort with other nations to address the shortage caused by supply restrictions imposed by keeping oil tankers out of the Strait of Hormuz. The IEA announced “The 32 Member countries of the International Energy Agency unanimously agreed today to make 400 million barrels of oil from their emergency reserves available to the market to address disruptions in oil markets stemming from the war in the Middle East.” The difficult logistics of these moves are that only a modest amount can be taken down and refined each day.
The oil to bring the facilities back to 100% full is purchased on the open market over time. And, there are small drawdowns that last over several years. These are “mandated” sales to keep a steady flow to large refineries, but are not considered part of an emergency decision.
There are ongoing worries about how the SPR could affect the environment. The caves could partially collapse, damaging the area’s wetlands. There is no plan to prevent that.
