How to Use the Strategic Petroleum Reserve

…Over the last eight months, the Department of Energy purchased more than 10 million barrels of oil for the SPR as the price rose $40 to above $120. This is not sensible. It puts upward pressure on oil prices at the worst possible time. It is a waste of taxpayer money. It gives aid and comfort to unfriendly nations. And it is an insurance policy that, for the most part, is no longer needed.

In fact, we should be selling oil from the SPR at $120. Doing so could be a powerful tool for U.S. energy policy.


First, a little background. The Strategic Petroleum Reserve was established in 1976 in response to the growing instability of the Persian Gulf oil supply, and to address the threat to oil imports in the event of a war with the Soviet Union. It’s been used sparingly: The largest drawdown was only 17 million barrels in 1991 during Desert Storm.

Today we have 701 million barrels of oil stored, of which 4.4 million barrels a day can be pumped. This could replace three quarters of OPEC imports for about 150 days.

But we do not need a brim-full SPR for national emergencies. There is a terrorist threat, to be sure, but it would not shut down oil imports. Other types of energy crises require small oil releases or are not related to import supply constraints.

But the SPR could be used to counterbalance the Organization of Petroleum Export Countries.

Wall St. Journal