What is the Strategic Petroleum Reserve?

President Biden announced on Thursday that his administration will release him 180 million barrels of oil of the country’s Strategic Oil Reserve over the next six months in a move to curb rising gasoline prices.

That’s a million extra barrels a day, which the White House said is the largest oil release in U.S. history, and this is the third time Mr. Biden has taken advantage of the oil tank during his presidency. . In November 2021 he ordered the release of 50 million barrelswhile in March the US joined 30 more countries that are members of the International Energy Agency to release 60 million barrels, including half of the US

White House officials said the latest move to take advantage of the oil reserve is part of a broader plan to help reduce gas prices, which now average $ 4.22 a gallon. For anyone wondering what exactly the Strategic Oil Reserve (SPR) is, here’s an explanation.

What is the Strategic Oil Reserve?

The SPR is a collection of 60 underground salt caverns where millions of gallons of crude oil are stored in barrels. Known as the world’s largest emergency crude oil supply, the federally owned facility is managed by the U.S. Department of Energy. Whoever is the current president of the United States may decide to take advantage of the reservation, but only under a set a list of parameters.

Where is the reservation?

The huge underground salt caverns used to store the country’s reserve oil are in four different locations along the coasts of Louisiana and Texas. Bryan Mound’s site is located on the outskirts of Freeport, Texas. Big Hill is about 26 miles outside of Beaumont, Texas. West Hackberry is half an hour from Lake Charles, Louisiana, and Bayou Choctaw is about 10 minutes from Baton Rouge, Louisiana.

How big is the reservation?

The four sites vary in size and together may contain 714 million barrels of crude oil, according to the Department of Energy. Bryan Mound, the largest of the four, is a 500-acre location with 19 storage caverns that can hold about 230 million barrels. Big Hill has 271 acres, with 14 storage caverns and an inventory of 143.7 million barrels. Bayou Choctaw, on 356 acres, has six storage caverns and a capacity of 71.9 million barrels. West Hackberry has 405 acres with 21 storage caverns that can hold 192.3 million barrels.

When was the SPR created?

The reserve was created in December 1975, when then-President Gerald Ford signed the Energy Policy and Conservation Act. In 1944, then-Secretary of the Interior Harold Ickes introduced the idea of ​​storing oil reserves in case of an emergency. The idea remained dormant for decades until 1973, when the Organization of the Petroleum Exporting Countries (OPEC) launched an oil embargo that inflicted enormous economic damage on the U.S. economy. This led policymakers to review Ickes’ proposal.

What is the purpose of the reservation?

Having a massive supply of crude oil ready to deploy helps keep the price of gasoline or the price of diesel for home heating somewhat predictable and stable for American consumers. When the U.S. decides to remove crude barrels from the reserve, it is known as emergency withdrawal or release. During a withdrawal, the U.S. selects an amount of crude for sale and then auctions it to the highest bidder, usually an oil company.

How has reserve oil been used in the past?

SPS drops have been relatively rare in its 45-year history. Before Biden took advantage of the reservation in 2021 and this year, previous U.S. presidents had ordered only three emergency withdrawals, according to the Department of Energy.

In 1991, for example, President George HW Bush ordered a 33.7 million barrel withdrawal shortly after Operation Desert Storm began in an effort to minimize the effect of the war on oil markets. George W. Bush fired 30 million barrels in 2005 after Hurricane Katrina hit the Gulf Coast. The Obama administration also released 30 million barrels in 2011, when the Libyan war reduced the country’s oil production.

It is more common for the government to release oil under exchange agreements, which effectively act as a loan. There have been more than a dozen such exchanges, usually after hurricanes. In 2000, former President Bill Clinton threw 30 million barrels to combat rising oil prices for heating, a move that was criticized at the time as a political ploy to help his vice president, Al Gore. , who was running for president.

The government has also released oil in non-emergency situations, such as raising money or covering a budget deficit.

Does touching the SPR really lower prices at the pump?

The short answer is yes, but not much, and only temporarily. This is due to the fact that domestic gas prices are much more closely linked to the overall cost of oil.

Historically, SPR launches have had a minor impact on fuel prices, and this effect usually lasts only two to three weeks, according to Clayton Allen, director of the U.S. political risk research firm Eurasia Group.

“SPR releases have an impact on prices, yes, but it’s not a big impact on prices,” Allen said. “If you’re worried about gas being $ 5 a gallon, a sprint release won’t return gas to $ 3.50, but it will prevent the oil market from taking over as it did in the 1970s.”

A 2017 Congressional Research Service report also found that attacking the SPR has only a modest impact on what Americans pay for gas. On June 23, 2011, for example, President Obama announced a release of 30 million barrels at a time, the average price of gas in the US was $ 3.60 a gallon.

“Gasoline prices were down about 2% over the next two weeks after the announcement of the SPR launch, but as of July 8, 2011, the price had returned to $ 3.61 per gallon. , about the same level as before the release “, according to the report.

CBS News’s Irina Ivanova contributed to this report.

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• Gas prices