US Strategic Petroleum Reserve Is Half Empty as Conflict Roils Mideast
US Strategic Petroleum Reserve Is Half Empty as Conflict Roils Mideast
The Biden administration is reportedly worried about potential for $5 gasoline
The Strategic Petroleum Reserve – seen here from the air over Freeport, Texas – is down to a 40-year low.Brandon Bell/Getty Images
THE MASSENGER Business
Al Lewis Published 10/27/23
ising conflict in the Middle East hasn't budged fuel prices in the U.S., but if does, the Biden administration has already run the nation's strategic petroleum reserve about half dry.
President Joe Biden opened the spigot last year after Russia invaded Ukraine and sent oil prices soaring. That drained more than 200 million barrels from the reserve, which is stored in four caverns along the Texas and Louisiana Gulf Coasts.
The strategic petroleum reserve is now holding about 350 million barrels, down from its peak of 727 million barrels stored in 2009.
Oil prices had been flirting with the $100 barrel mark before the summer driving season came to a close, but they've since moderated. The U.S. benchmark grade, West Texas Intermediate, was trading for about $84 a barrel on Thursday, while the international grade, Brent, was trading for about $88.50.
The average price for a gallon of gasoline was $3.50 on Thursday, according to AAA's daily survey. That's down from $3.84 from a month ago, even after Hamas attack on Israel and the ongoing threat of a widening Middle East conflict.
Opening the strategic reserve last year lowered gasoline prices by about 40 cents a gallon, according to the Treasury, at a time when inflation was raging.
"It’s important to remember that average gas prices are still down nearly $1.50 since their peak in 2022, saving a family with 2 cars over $155 per month on average," a White House official told The Messenger in an email.
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The Biden administration is now bracing for a another possible surge in oil prices, according to the New York Times, citing unnamed administration officials. The newspaper said administration officials are meeting with big oil-producing nations, including Saudi Arabia, that have been holding back on production.
They are also considering tapping the strategic reserve again to avoid the prospect of $5 gasoline as an election approaches.
"The President is committed to lowering prices at the pump for Americans and maintaining a stable and secure energy supply," the White House official said.
The strategic petroleum reserve, now sitting at a 40-year low, is a bit of a political slush fund. Politico notes that both parties have tapped it. In 2015 and 2016, a Republican-led Congress authorized sales of nearly 190 million barrels to pay for highways and drug approvals. And the Trump administration authorized sales of reserves to offset budget deficits.
While the strategic petroleum reserve is low, it may not be critically low. An official from the International Energy Agency on Tuesday said member nations, including the U.S., have enough supply to stabilize oil markets in the event of a market shock.
"By the size of 90 days of net imports, I think that should be good enough at this moment," Keisuke Sadamori, director of energy markets and security at IEA, told Reuters. "Such kind of stockpiles are necessary not only for taking actual actions but also to keep some confidence to the market."
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