Three days before Christmas in 1975, President Gerald Ford signed a law creating the United States’ first emergency stash of crude oil. The nation had been traumatized by an oil embargo a few years earlier.
At the time, OPEC, the cartel of oil-producing nations, had a stranglehold on the world’s supply of crude. Today the United States is one of the world’s largest producers and a major seller, not just a buyer, of oil.
But the United States still has its stash. The Strategic Petroleum Reserve contains 645 million barrels — the world’s largest backup oil supply.
On Sunday, US President Donald Trump authorized the use of oil from the emergency reserve following weekend attacks on Saudi Arabian oil facilities. The strikes hit at the heart of Saudi energy production, knocked out about 5% of the world’s supply of oil, and caused prices to surge.
The strategic reserve, or SPR, is a complex of four sites along the Texas and Louisiana gulf coasts that have deep underground storage caverns, 2,000 to 4,000 feet below the surface. The most oil the SPR has ever held was 727 million barrels in 2009.
Only the US president can order the SPR to be used, and that has happened only three times.
The SPR was most recently used in June 2011 when civil unrest in Libya unsettled global oil exports. The US government, worried that supply disruptions would threaten a fragile global economy still recovering from the Great Recession, ordered the sale of 30 million barrels.
The SPR was also deployed in 2005 after Hurricane Katrina devastated the nation’s oil infrastructure along the Gulf of Mexico. Its first use was in 1991 when the United States attacked Iraq in Operation Desert Storm.
Any oil drawn from the SPR would not give an immediate boost to global supply. It has to be pulled out of storage and then sold into the marketplace of buyers and sellers, a process that could take about two weeks.