The Strategic Petroleum Reserve: History, Perspectives, and Issues Page: 2 of 16
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The Strategic Petroleum Reserve:
History, Perspectives, and Issues
Congress authorized the Strategic Petroleum Reserve (SPR) in the Energy
Policy and Conservation Act (EPCA, P.L. 94-163) to help prevent a repetition of the
economic dislocation caused by the 1973-1974 Arab oil embargo. The program is
managed by the Department of Energy (DOE). The capacity of the SPR is 727
million barrels, and it currently holds slightly more than 700 million barrels of crude
oil. In addition, a Northeast Heating Oil Reserve (NHOR) holds 2 million barrels of
heating oil in above-ground storage. At issue in recent years has been whether SPR
capacity should be expanded and whether the reserve should continue to be filled.
During the period FY1999-FY2007, roughly 139 million barrels of royalty-in-
kind (RIK) oil were added to the SPR, with an estimated 19.1 million barrels to be
acquired during FY2008. This is oil turned over to the U.S. government in lieu of
cash royalties on offshore oil production from federal leases that would otherwise be
paid to the Treasury. The Energy Policy Act of 2005 (EPACT, P.L. 109-58)
permanently authorized the SPR and permits fill only if it can be established that
adding to the SPR is not placing upward pressure on prices. However, the Bush
Administration continued RIK fill. With gasoline prices exceeding, on average,
$3.60/gallon, and approaching $4.00/gallon in some regions, some policymakers
proposed that Congress take action to halt RIK deliveries. On May 13, the Senate,
by a vote of 97-1, and the House, by a vote of 382-25, approved suspension of RIK
fill. President Bush indicated that he would not veto the legislation. There were
reports on May 14 of further SPR legislation that might be introduced in the House.
The bill would reportedly initiate an exchange of SPR crude and direct SPR funds
from a prior sale to be used to fund energy research and development programs.
The SPR comprises five underground storage facilities, hollowed out from
naturally occurring salt domes in Texas and Louisiana. EPCA authorized drawdown
of the Reserve upon a finding by the President that there is a "severe energy supply
interruption." Congress enacted additional authority in 1990 (Energy Policy and
Conservation Act Amendments of 1990, P.L. 101-383), to permit use of the SPR for
short periods to resolve supply interruptions stemming from situations internal to the
United States. The meaning of a "severe energy supply interruption" has been
controversial. A spike in crude and product prices often stirs calls to use the SPR.
However, the statute intends use of the SPR only to ameliorate discernible physical
shortages of crude oil. The dynamics of world oil markets, and price sensitivity to
planned or unplanned events that temporarily reduce refinery production, have added
new complexities to decision making on when to fill and to use the SPR.
Congress approved $25 million in the FY2008 budget for land acquisition for
a site in Richton, Mississippi, that would add 160 million barrels of capacity. Further
environmental assessment of the site is underway.
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The Strategic Petroleum Reserve: History, Perspectives, and Issues, report, May 15, 2008; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc817676/m1/2/: accessed September 25, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.