As US Crude-Oil Reserve Fills, Questions Abound

In coming days, a 500,000-barrel delivery of crude oil will push the U.S. government’s emergency stockpile to capacity. What happens to the Strategic Petroleum Reserve beyond that is far from clear.

Federal law passed in 2005 requires expansion of the rainy-day reserve by 38% from near 727 million barrels now to one billion barrels of capacity. That was enacted when the government forecasted a decades-long surge in oil demand requiring steadily rising imports.

The Energy Department in 2005 saw U.S. oil use rising 40% to 28 million barrels a day in 2025 from 20 million barrels a day in 2003, with imports meeting 68% of demand. Now, DOE sees oil use stable at 19 million barrels a day through 2035 and biofuels contributing the needed four million barrels a day of extra fuel. Improved fuel mileage and increased efficiencies will cut reliance on imported oil to about 45%. That suggests the current size of the reserve would provide adequate insurance against supply disruptions until 2035.

“There is no doubt that the Obama administration does not have an interest in spending capital on an expansion of the facilities,” said John Shages, an Energy Department SPR official for 22 years before retiring two years ago. “Even if SPR had empty capacity…there is no way that the Congress would appropriate funds for oil acquisition. So expansion is out for the foreseeable future,” he said.

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