Strategic Petroleum Reserve: Mandated Sales and Reform (CRS Report for Congress)
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| Release Date |
Revised Oct. 1, 2019 |
| Report Number |
R45577 |
| Report Type |
Report |
| Authors |
Pirog, Robert |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
The Strategic Petroleum Reserve (SPR), administered by the Department of Energy (DOE), has played a role in U.S. energy policy for over 40 years. Over that time, its primary focus has changed from its original intent as world oil market conditions have changed. Originally intended to offset the market power of cartels and prevent economic damage from oil supply disruption, it has become primarily a tool for combatting the fuel market effects of domestic natural disasters like hurricanes. Most recently, U.S. net imports of oil and petroleum products have decreased as a result of the increase in domestic oil production. Because of lower reliance on imports, some stakeholders see less need for an oil stockpile, and view the SPR more as a mechanism for providing funding for a wide variety of legislative purposes, ranging from health care, to highways, and general purpose revenues. Over this period, the SPR has expanded its potential usefulness to cover all of these purposes.
As a member of the International Energy Agency (IEA) and a participant in the International Energy Program established by the IEA, the United States, as are all net-importer nations in the IEA, is required to hold the equivalent of 90 days of its net imports of oil and petroleum products as a reserve stock. As a result of relatively stable U.S. oil consumption and rapidly increasing production, and declining net imports, available oil stocks held in the SPR now are almost double the 90-day requirement.
While the SPR has recently seen relatively little use in combatting oil supply disruptions caused by political and military instability, or even natural disasters, it has provided a source of funding for a variety of legislative initiatives. These mandated sales from the SPR have committed almost 260 million barrels of oil for sale by FY2027, leaving less than 400 million barrels of uncommitted oil reserves. Determining whether further reductions can be made from the reserve while maintaining its ability to carry out its designed purpose is a key energy policy question. The extreme variant of this question is whether a reserve is required at all, or whether privately held stocks, as practiced by most European countries, are adequate to meet international commitments.
Legislation in the 115th Congress, H.R. 6511, sought to maintain the SPR facility and infrastructure, while reducing operating and maintenance costs, by renting unused storage capacity in the reserve to private companies and foreign nations. As of this writing, no bills have been introduced in the 116th Congress modifying the SPR.
