The Recent History of Congress Using the Strategic Petroleum Reserve as a Piggy Bank

President Joe Bidenhis detractors accused him of having widened the Strategic Petroleum Reserve beyond its original scope and beyond the use of previous presidents, which was as a tool to deal with oil supply disruptions.

He wouldn’t be the first.

Congress, which created the SPR nearly five decades ago after Arab producers banded together to cut off their oil from the United States and its allies, has repeatedly tapped the reserve in recent years by ordering the government to sell reserve oil for its own purposes, such as to raise revenue to pay for other priorities – including a set of sales that may not end until 2031 (more details below).

Here’s how Congress used the SPR to raise funds:

History of reserves

Congress created the SPR, which consists of a network of pipelines and a series of underground storage caverns in Louisiana and Texas, in 1975.

It targeted the reserves “to help prevent or mitigate a repeat of the economic disruption caused by the 1973 Arab embargo,” according to the Congressional Research Service. In this case, oil prices have quadrupled.

Congress defines the role of the SPR and the extent of the executive’s authority to direct withdrawals and sales of reserve oil. The President, under the Energy Policy and Conservation Act passed in 1975, can order emergency sales in the event of a “serious disruption of energy supply”.

Congress then expanded presidential authority by authorizing SPR levies to prevent or lessen the impact of a severe domestic supply disruption.

Biden’s emergency sales this year join three other such emergency exits: one during Operation Desert Storm in 1991, a second after Hurricane Katrina in 2005 and a third following the Libyan oil supply disruptions in 2011.

The federal law also authorizes the Secretary of Energy to conduct test sales to evaluate SPR system procedures, as well as to trade oil between reserves and refiners, which the Biden administration has done in a case.

How Congress uses the SPR

Congress has ordered the government to sell tens of millions of barrels of reserve oil in recent years for non-emergency reasons, including to increase Treasury revenue, to support maintenance of reserves, and to fund federal budget deficit reduction. .

For example, the 21st Century Cures Act, signed into law in 2016, directed the Secretary of Energy to take and sell 25 million barrels of SPR crude oil over three consecutive fiscal years, beginning in fiscal year 2017.

The Department of Energy sold nearly 10 million barrels of crude oil for delivery in May and June 2017, raising a total of $449.2 million for the Treasury, and the agency made sales covering the rest. barrels of the Cures Act over the next two years, alongside the separately mandated SPR sales in the 2015 bipartisan budget bill.

The bipartisan Infrastructure Act, which took effect in November 2021, directed the Energy Secretary to tap and sell 87.6 million barrels of SPR crude oil between fiscal years 2028 to 2031 and deposit it with the Treasury.

In April of this year, Congress had since 2015 enacted eight laws mandating the sale of nearly 359 million barrels of oil from the SPR between fiscal year 2017 and fiscal year 2031, according to the Congressional Research Service, of which 93 million were sold. .


Where are the stocks

Mandatory sales, in addition to emergency and other sales, have helped drive reserve levels down from their peak of around 727 million barrels in 2010 to around 405 million barrels, and declining, currently in storage. .

In November 2021, when Biden announcement its first release of SPR oil to rein in high gasoline prices, SPR inventories stood at around 600 million barrels.

Comments are closed.