President Biden is seeking ways to respond to the recent increase in Fuel prices. The Biden administration’s potential to release crude oil from the country’s Emergency oil reserve, or the Strategic Petroleum Reserve, has gotten a lot of attention. Much will be determined by oil prices, which have risen dramatically in recent months, returning to pre-pandemic levels and then some. However, after soaring to over $86 in October, they have since fallen to about $80.
Prices are being influenced by several variables, including the notion that the White House is considering tapping the stockpile. Here’s a primer on the country’s oil reserves, as well as whether or not tapping them would be beneficial. What is the SPR, or Strategic Petroleum Reserve? It’s a crude oil reserve that the US has on hand in case of an Emergency. If supplies are disrupted, such as a hurricane or a war, the US can draw on its stockpiles to avoid severe shortages.
The SPR was founded in the aftermath of the 1970s oil crisis. In Texas and Louisiana, the oil is kept in underground salt caverns. More than 600 million barrels of oil are now stored in the caves. At current US consumption levels, that’s just over a month’s worth of oil. The oil in reserve can also be loaned out to oil firms (who repay it with interest) or auctioned off to raise money for the federal government, in addition to being used for emergencies.
For non-Emergency reasons, Congress has already directed the release of tens of millions of barrels over the next few years. The Emergency oil reserve isn’t designed to be used to regulate prices — it’s supposed to be used to deal with significant supply interruptions, which the market isn’t experiencing right now.