What is the Strategic Petroleum Reserve?

Oil supplies were cut off during the oil embargo (1973-1974), so in 1975 the United States started the petroleum reserve. The government decided that the country should never again be caught short which put the economy in shock. The Strategic Petroleum Reserve can be tapped when oil prices rise to help make sure that people who use oil to heat their homes will have plenty and that the price will not be too high. It was President Clinton who authorized the Department of Energy, which manages the reserve, to release up to 30 million barrels of oil in a swap with oil companies. The companies took the oil in fall 2000 with a promise to return the oil by fall 2001. The government hoped that the companies would use the oil to keep supplies adequate during winter.

Stored in underground salt caverns at four sites along the Gulf of Mexico, the Strategic Petroleum Reserve is the United States' emergency oil stockpile, and it is the largest emergency petroleum supply in the world. The reserve stores about 570 million barrels of crude oil. A barrel contains 42 gallons (59 liters) of oil. To create the caverns, workers drill into a salt dome and then proceed to put water into the hole to dissolve the salt. Holding about 10 million barrels of oil, each cavern is about 2,000 feet deep. The United States Energy Department has chosen using salt caverns to store the oil reserve because it is much more economical than storing it in tanks above ground. Another reason for this choice is because the pressure from the earth will seal up any leaks that might develop. Plus the temperature difference in the caverns, which are 2,000 feet below the surface of the earth, keeps the oil circulating so that the petroleum maintains its quality.

The government put the oil near the Gulf of Mexico because there are many oil refineries nearby and therefore shipping is readily available. The sites are Bryan Mound near Freeport, Texas; Big Hill near Winnie, Texas; West Hackberry near Lake Charles, Louisiana; and Bayou Choctaw near Baton Rouge, Louisiana. The reserve could store up to 700 million barrels. Most of the oil in the reserve comes from Mexico and the North Sea.

It costs the federal government $21 million every year to maintain the oil reserve. The oil reserve employs about 1,150 people, of which about 125 are government employees, and the rest are contracted workers. The Energy Department will get about $157 million to buy oil for the reserve in the coming budget year. Oil companies like Triple Diamond Energy Corporation may become involved in supplying the oil so that the reserve never gets low or tapped out.

The United States uses almost 19 million barrels of petroleum every day, and more than half of that oil comes from imports. A reserve of 60 days' worth of petroleum could help keep the oil flowing in case there ever is a cut-off or embargo again. The last time that the United States used oil from the reserve was during the Persian Gulf War in 1991 to keep oil plentiful and the prices stable. That drawdown is different from the exchange authorized recently because the companies who bid for it will return the oil this time.