Last week, President Biden announced the release of one million barrels of oil per day from the Strategic Petroleum Reserve (SPR) for the next 180 days, which the White House touted as “the largest release of oil reserves in history.” Although President Biden’s intent is to lower prices at the pump, history shows that any dip in gas prices will probably be small and temporary. Here are five facts on the SPR.
1. The SPR is the largest emergency supply of petroleum in the world.
The reserve, which was created in 1975 by Congress as a response to the 1973-74 OPEC oil embargo, is intended to counter any severe interruption in the oil supply. It has the capacity to hold 714 million barrels of oil — about as much as the U.S. produces in six weeks.
It currently holds just under 600 million barrels of oil, about 29 days’ worth at current consumption levels, in 60 underground salt caverns along the Gulf Coast in Louisiana and Texas.
2. The U.S. has been selling off oil from the SPR since 2015.
The sales were started as a means of reducing the federal deficit. Over the past five years, the Energy Department has held at least seven unpublicized sales, selling about 18% of what had been in the reserve.
3. This is the third time in less than six months that President Biden has released oil from the SPR.
Last November, the White House announced the release of 50 million barrels to address high gasoline prices, and on March 1, the President announced the release of 30 million barrels in response to the Russian invasion of Ukraine. It takes 13 days from the time of a presidential announcement for the oil to enter the market.
4. Past releases of oil from the SPR have only modestly and temporarily lowered prices at the pump.
In 2017, the Congressional Research Service examined the release of 30 million barrels by President Obama at a time when the average U.S. gas price was $3.60 per gallon. The price declined by about two percent over the next two weeks, but by one week later was $3.61 per gallon.
Roger Read, a senior energy analyst at Wells Fargo Securities, said Biden’s action is unlikely to have a major impact: “In the end, it’s a little bit of a Band-Aid, and I think a little bit of hoping to get, later in the year, [an] OPEC catch-up.” Scott Sheffield of Pioneer Natural Resources similarly said, “It will lower the oil price a little and encourage more demand. But it is still a Band-Aid on a significant shortfall of supply.”
5. The U.S. maintains only about one million gallons of gasoline in reserve.
The oil in the SPR is almost entirely crude oil that needs to be refined into fuels such as gasoline, diesel, and kerosene. After Superstorm Sandy hit the Northeast in 2012, the Energy Department created the Northeast Gasoline Supply Reserve, which holds one million gallons of gasoline. A similar reserve holds about two million gallons of home heating oil.
This article first appeared on Real Clear.