The Strategic Petroleum Reserve: History, Perspectives, and Issues

Congress authorized the Strategic Petroleum Reserve SPR in the Energy Policy and Conservation Act EPCA, P.L. 94-163 to help prevent a repetition of the economic dislocation caused by the 1973-1974 Arab oil embargo. The program is managed by the Department of Energy DOE. The capacity of the SPR is 727 million barrels, and it currently holds around 704 million barrels of crude oil. In addition, a Northeast Heating Oil Reserve NHOR holds 2 million barrels of heating oil in above-ground storage. At issue in recent years has been whether SPR capacity should be expanded and whether the reserve should continue to be filled. During the period FY1999-FY2007, roughly 139 million barrels of royalty-in-kind RIK oil were added to the SPR. An estimated 19.1 million barrels was to be acquired during FY2008. RIK oil is turned over to the U.S. government in lieu of cash royalties on offshore oil production from federal leases that would otherwise be paid to the Treasury. The Energy Policy Act of 2005 EPACT, P.L. 109-58 permanently authorized the SPR and permits fill only if it can be established that adding to the SPR is not placing upward pressure on prices. However, the Bush Administration continued RIK fill. With gasoline prices exceeding, on average, 3.60gallon, and approaching 4.00gallon in some regions, some policymakers proposed that Congress take action to halt RIK deliveries. On May 13, the House and Senate passed H.R. 6022, suspending RIK fill. President Bush signed the legislation into law P.L. 110-232 on May 19. However, a few days earlier, on May 16, DOE announced it would not accept bids for an additional 13 million barrels of RIK oil that had been intended for delivery during the second half of 2008. An energy bill H.R. 3044 scheduled to reach the Senate floor during the week of June 9 includes language requiring suspension presumably, this title will be dropped.