The Strategic Petroleum Reserve

Contents: (1) History of the Strategic Petroleum Reserve (SPR): Establishment of the SPR; (2) The Drawdown Authorities: Proposals in the 111th Congress to Amend the Authorities; (3) Acquisition of Crude Oil for the SPR: Resumption of Fill (2009); Royalty-in-Kind Acquisition; (4) When Should the SPR Be Used?: The Debate Over the Years; Use of the SPR in the Persian Gulf War (1990); Hurricanes and Changes in the Market Dynamics (2005-2008); The Call for an SPR Drawdown: Summer 2008; (5) Establishment of a Regional Home Heating Oil Reserve.

The Strategic Petroleum Reserve (SPR) was created in 1975 to help protect the U.S. economy from oil supply disruptions and it currently holds about 700 million barrels of crude oil. The Energy Policy Act of 2005 required the Department of Energy to expand the Strategic Petroleum Reserve's maximum storage capacity to 1 billion barrels of crude oil. As the Department of Energy (DOE) begins to expand the SPR, past experiences can help inform future efforts to fill the reserve in the most cost-effective manner. Thus, this book will focus on the factors that experts recommend be considered when filling and using the SPR, to what extent the SPR can protect the U.S. economy from damage during oil supply disruptions and under what circumstances would an SPR larger than its current size be warranted. As part of this book, GAO developed oil supply disruption scenarios, used models to estimate potential economic harm, and convened 13 experts in conjunction with the National Academy of Sciences. This is an edited, excerpted and augmented edition of a GAO and U.S. Department of Energy publication.

In 1973, the United States and other western countries were shocked by the Arab oil embargo. Lines formed at gasoline pumps; fuel stations ran out of supply; prices skyrocketed; and the nation realized its vulnerability to decisions made by leaders of countries half a world away. In response, the U.S. Strategic Petroleum Reserve (SPR), which was signed into law by President Gerald Ford in 1975, has become the nation?s primary tool of energy policy. Following its first major use during the Persian Gulf War of 1991, officials and policy makers at the highest levels increasingly turned to the SPR to stave off shortages and mitigate rising energy prices. Author and historian Bruce A. Beaubouef examines, for the first time, the interactions that have shaped the development of the SPR. He argues that the SPR has survived because it is a passive regulatory tool that serves to protect energy consumers and petroleum consumption and does not compete with the American oil industry. Indeed, by the late twentieth century, as American import dependency reached new heights, refiners and transporters increasingly relied upon the SPR as a ready resource to help maintain feedstock when supplies were tight or disrupted. In a time of continued vulnerability, this definitive work will be of interest to those concerned with the history, economy, and politics of the oil and gas industry, as well as to historians and practitioners of oil and energy policy.

The possibility of storing refined petroleum products as part of the Strategic Petroleum Reserve (SPR) has been contemplated since the SPR was created in 1975. The SPR, which currently holds about 700 million barrels of crude oil, was created to help insulate the U.S. economy from oil supply disruptions. However, the SPR does not contain refined products such as gasoline, diesel fuel, or jet fuel. The Energy Policy Act of 2005 directed the Dept. of Energy to increase the SPR's capacity from 727 million barrels to 1 billion barrels. This testimony discusses (1) some of the arguments for and against including refined products in the SPR; and (2) lessons learned from the management of the existing crude oil SPR that may be applicable to refined products. Illus.