Republican presidential candidate Donald Trump has pledged to immediately refill the US Strategic Petroleum Reserve (SPR) if he wins the presidential election in November.
In an interview with Fox News on Wednesday, Trump emphasized the critical need to replenish the SPR, which is at its lowest level since 1983.
“We have to fill up the strategic reserves immediately,” Trump stated.
“We don’t need energy from any other country. We have to fill up the strategic reserves again. It is the lowest number it has ever been.”
Strategic Petroleum Reserve: Current status
The SPR, the world’s largest supply of emergency crude oil, is stored in massive salt caverns along the Gulf of Mexico coastline.
It was established in response to the severe oil shortages and price spikes caused by the 1973-1974 oil embargo imposed by the Organization of Arab Petroleum Exporting Countries (OAPEC).
This embargo, a reaction to US support for Israel during the Yom Kippur War, exposed the vulnerability of the US to foreign oil supply disruptions.
As of July 26, the SPR held 375 million barrels of oil, just over half of its total capacity of 714 million barrels.
Returning it to the levels seen during Trump’s presidency would require the US to purchase nearly 300 million barrels of crude, necessitating new funding approval from Congress.
Trump’s criticism of Biden’s use of the SPR
In 2022, President Joe Biden released approximately 180 million barrels from the SPR to mitigate rising fuel prices following Russia’s invasion of Ukraine.
This decision has become a point of contention among Republicans, who accuse the Biden administration of using the SPR to keep gasoline prices low in an election year. The US consumes about 20 million barrels of oil daily, according to the US Energy Information Administration.
Trump criticized Biden’s strategy, stating,
“He’s using the strategic reserves, which is meant for military, which is meant for war and very important things, he’s using it to try to keep gasoline prices down and we can’t allow that to happen.”
Recent moves to refill the SPR by the Biden administration
In recent weeks, the White House has started to refill the SPR, taking advantage of lower oil prices.
Last week, the Department of Energy announced the purchase of an additional 4.65 million barrels. Saudi Aramco, the world’s largest oil company, noted in its recent earnings call that it expects these purchases to continue, contributing to healthy oil demand over the coming months.
Giovanni Staunovo, a commodity analyst at UBS, mentioned that Congress has currently authorized enough spending to buy about 15 million more barrels of crude.
“Properly utilized strategic oil inventories can reduce oil price volatility, so it makes sense to have sufficiently high inventories,” Staunovo explained in the FT report.
“But considering the amount of gasoline the US consumes, holding strategic inventories of refined products would make more sense,” he added.
Trump’s record on the SPR
Trump highlighted his efforts to refill the SPR during his presidency, saying, “I was filling that up at levels that they have never seen before.”
However, according to data from the Energy Information Administration (EIA), the SPR was drawn down by 57 million barrels during Trump’s tenure.
Trump had, in 2020 proposed to buy 77 million barrels for the reserve as oil prices fell because of the Covid-19 pandemic. But the Democratic-controlled Congress rejected the $3 billion in funding that would have paid for the purchase, describing it as a subsidy to big oil companies.
Amrita Sen, director of research at Energy Aspects, pointed out that Congress had mandated a series of sales during Trump’s presidency to reduce the size of the SPR to 400 million barrels by 2027.
The price of benchmark Brent crude rose by 2.1% on Wednesday to $78.12, roughly the same level it was before Trump’s comments.
The potential for significant purchases to refill the SPR could influence oil markets and prices in the coming months, particularly if Trump’s proposed policies come to fruition
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