The U.S. is slowly replenishing the Strategic Petroleum Reserve, planning to buy back more oil in the first several months of next year, after the largest ever sale from the stockpile in 2022.
Here are facts about the SPR and efforts to put oil back in.
WHAT IS THE SPR?
It is the world's largest emergency oil stash. Then-President Gerald Ford created the SPR in 1975 after the Arab oil embargo spiked gasoline prices and damaged the economy. Presidents have tapped the stockpile to calm oil markets during war involving oil producing countries or when hurricanes hit oil infrastructure along the U.S. Gulf of Mexico. The oil is held in heavily guarded underground caverns at four sites on the Texas and Louisiana coasts.
HOW MUCH SPR OIL WAS SOLD IN 2022?
WHAT PRICE DOES THE US WANT TO BUY SPR OIL ?
The administration says it sold the 180 million barrels at an average of about $95 a barrel. It wants to buy back oil at $79.99 a barrel or less. Prices of the U.S. oil benchmark West Texas Intermediate were about $77.50 a barrel on Wednesday and prices for WTI futures contracts in the first three months of next year were about $74 a barrel. Conflict in the Middle East could quickly boost oil prices and put the buyback plans in doubt, however. In April, the U.S. canceled an SPR purchase of oil due to rising prices.
HOW MUCH IS COMING BACK?
The administration has so far bought back more than 43 million barrels of domestic oil since the 2022 sales, it says. The DOE says it has also sped up the return of nearly 4 million barrels to the SPR from loans to oil companies.
Buybacks of much larger volumes could also risk pushing up oil and gasoline prices ahead of the Nov. 5 presidential election. Energy Secretary Jennifer Granholm has said the U.S. was being careful not to do anything to remove supply from the market at times when prices are high.
CURRENT SPR LEVEL
The reserve currently holds 376.5 million barrels, nearly 62% of which is sour crude, or oil that many U.S. refineries are engineered to process. The most it ever held was nearly 727 million barrels in 2009.
The sales in 2022 sank the SPR to the lowest level in about 40 years. That angered some Republicans who accused the Democratic administration of leaving the U.S. with a thin supply buffer to respond to a future crisis.
The administration says it has a three-pronged strategy to return oil to the reserve. That includes buying back oil, the return of oil loaned from the SPR to companies, and canceling congressionally mandated sales of 140 million barrels of SPR oil through 2027. Both Democratic and Republican lawmakers had voted for those sales to pay for government programs.
The U.S., which is producing oil at record volumes, has more crude in the SPR than required as a member of the Paris-based International Energy Agency, the West's energy watchdog. The U.S. is required to hold 90 days' worth of net petroleum imports, and the SPR currently has about 155 days worth of those imports, according to Mason Hamilton of the American Petroleum Institute.
