Anytime you hear someone talking about “oil reserves,” what they’re actually referring to is the U.S. Strategic Petroleum Reserve (SPR). The SPR is the country’s stash of oil located along the Louisiana and Texas Gulf Coasts. The SPR’s highest-ever inventory was in December 2009, when it had 726.6 million barrels of crude oil.
With looming fuel shortages expected this summer, experts predict it could be worse than the oil crisis experienced in the 1970s. The question on most people’s minds as nationwide gas prices continue to skyrocket is: How much oil is in the strategic petroleum reserve? Here’s everything you need to know.
Where Is the Strategic Petroleum Reserve
The SPR is located in four underground salt caverns stretching along the Gulf of Mexico coastline in Louisiana and Texas. It is the world’s biggest supply of emergency crude oil and was created shortly after the 1973-1974 oil embargo as a way to counteract the effect of disruptions in the supply of petroleum products that would otherwise compromise the country’s economic and security position. It was also established to fulfill the country’s obligations under the International Energy Program.
Cumulatively, the authorized storage capacity of the U.S. oil reserves related to the SPR is 714 million barrels of crude oil, although the highest inventory ever held was a whopping 726.6 million in December of 2009.
As of May 27, 2022, the SPR had 526.6 million barrels of crude oil in storage. The sheer volume of the strategic petroleum reserve makes it a major deterrent to oil imports and is a critical tool in shaping foreign policy.
When Can the SPR Release Oil
Pursuant to the provisions of the Energy Policy and Conservation Act (EPCA), crude oil in the strategic reserves can be sold competitively to the world market as the President deems necessary.
This has only happened four times in history, one of which was in June 2011, when then-President Barack Obama directed 30 million barrels of crude oil to be sold to fill in the gap in the energy supply due to the unrest in Libya. The U.S., in conjunction with its International Energy Agency (IEA) partners, cumulatively released 60 million barrels of crude oil in total.
The most recent SPR drawdown was on March 31, 2022, when President Joe Biden directed 1 million barrels of oil to be released to the crude market daily for six months. He said in a statement that the move is supposed to bridge the gap in supply until domestic production picks up toward the end of the year.
EPCA also authorizes the Secretary of Energy to make a limited number of releases with entities outside the Federal Government. With this authority, the SPR can negotiate exchanges where it receives a larger amount of crude oil than what it initially released, resulting in the acquisition of more oil.
With that in mind, below is a summary of the three possible scenarios outlined in the Energy Policy and Conservation Act when crude oil in the SPR can be released.
- Full drawdown: The President has the power to direct a full drawdown of the SPR to mitigate a severe interruption of the energy supply. EPCA refers to this as a nationwide “oil and gas supply shortage.”
- Limited drawdown: If there’s an existing situation that causes or is likely to cause a significant international or domestic shortage in energy supply over a significant duration, EPCA allows for a limited drawdown of the SPR.
- Test sale or exchange: The provisions of EPCA authorize the Secretary of Energy to carry out test drawdowns and crude oil distributions from the SPR. In the case of an exchange, the crude oil needs to be returned to the oil reserve within a designated time frame.
It is worth noting that the maximum drawdown rate per day is 4.4 million barrels for up to 90 days. After that, the rate of release per day declines as the caverns are emptied. For context, a 1-million-barrel per day release rate is sufficient to meet U.S. oil demands continuously for about one and half years.
Oil Reserves by Country
Below is a breakdown of the 10 largest oil reserves in the world based on a 2019 statistical review published by B.P. Keep in mind that the term “oil reserves” as used in this context refers to both the tapped and untapped underground oil deposits.
- Venezuela – Approximately 304 billion barrels, accounting for 17.5% of the total global resource.
- Saudi Arabia – Approximately 298 billion barrels, accounting for 17.2% of the total global resource.
- Canada – Approximately 170 billion barrels, accounting for 9.8% of the total global resource.
- Iran – Approximately 156 billion barrels, accounting for 9% of the total global resource.
- Iraq – Approximately 145 billion barrels, accounting for 8.4% of the total global resource.
- Russia – Approximately 107 billion barrels, accounting for 6.2% of the total global resource.
- Kuwait – Approximately 102 billion barrels, accounting for 5.9% of the total global resource.
- United Arab Emirates – Approximately 98 billion barrels, accounting for 5.6% of the total global resource.
- United States – Approximately 69 billion barrels, accounting for 4% of the total global resource.
- Libya – Approximately 48 billion barrels, accounting for 2.8% of the total global resource.
OPEC Oil Reserves
Current estimates indicate that 79.4% of the global oil reserves are situated in OPEC member countries which translates to about 1.19 trillion barrels. OPEC is short for Organization of the Petroleum Exporting Countries. 64.5% of OPEC oil reserves are located in the Middle East.
OPEC was established to harmonize the petroleum policies of member states and provide them with economic and technical aid. It regulates oil supply in a bid to control the price of petroleum products on the world market. This avoids fluctuations that may negatively impact the respective economies of both the purchasing and producing countries.
OPEC comprises 13 member countries, including:
- United Arab Emirates
- Saudi Arabia
- IR Iran
- Equatorial Guinea
Qatar and Ecuador both terminated their membership in 2019 and 2020, respectively.
The United States is not a member of OPEC. As a result, it maintains complete control over its supply and production without any external interference.
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