The Strategic Petroleum Reserve
The Strategic Petroleum Reserve (spr) in the United States is the largest supply of oil set aside for emergencies in the world. The U.S. government stores this oil in four different sites located in deep underground salt caverns between 2,000 and 4,000 feet below the surface, along the Gulf Coast of Texas and Louisiana.
The need for an emergency reserve was advocated in 1944 by Secretary of the Interior Harold Ickes and by several others in subsequent years. However, no action was taken until the Arab oil embargo of 1973-74, when many Arab nations cut off the oil they were exporting to the U.S. The turmoil that resulted led to the establishment of the spr, authorized by President Gerald Ford on Dec. 22, 1975.
Today, the spr contains more oil than ever: roughly 677 million barrels and growing. This represents roughly two months of “import protection”—how long the oil in the spr would last, theoretically, if all imports were cut off. However, oil in the spr can be withdrawn at a maximum rate of 4.3 million barrels per day for the first 90 days, and then the rate decreases as storage caverns are emptied. With that limitation, the oil would last much longer (at least five months), but, depending on the size of the emergency, may not be enough to allay supply shortages.
In addition to the government’s emergency reserve, private company reserves in the U.S. are estimated to equal approximately three months of import protection.
In an emergency, the president would give the order to withdraw oil from the spr. The oil would be distributed (through competitive sale) to private companies. It would be released into the marketplace within 13 days from the time of the president’s decision. Only one emergency drawdown has ever occurred. On Jan. 16, 1991, when Iraq invaded Kuwait, President George H.W. Bush ordered it in order to help stabilize oil markets during the Persian Gulf War.
The effectiveness of the spr in a true emergency, however, has never been tested. The limited nature of the reserves and the limited rate at which they can be utilized demonstrate the vulnerability of the United States should its oil supply be cut off through instability in key locations of the world or by hostile forces en route. Any such shortage of oil would have a profound impact on the U.S. economy.
