The White House on Wednesday is expected to make an additional 15 million barrels of crude oil from the U.S. Strategic Petroleum Reserve available for December. In spring, President Joe Biden had authorized the release of 180 million barrels until the end of this year, which will now be exhausted. The U.S. heads to the polls for the midterm election in less than three weeks.
The move is designed to cushion high oil prices brought about by a crude shortage in connection with embargoes against Russia, which are being made worse by a recent OPEC production cut and global oil extraction still reeling from the effects of the coronavirus pandemic. U.S. oil production, which had been growing rapidly in the past two decades, was hit hard by Covid-era energy price decay. As a result and because of fears of a new recession, the industry has been reluctant to invest in new projects, a development mirrored in other parts of the world.
As of mid-October, numbers from the Energy Information Administration and the Strategic Petroleum Reserve website show reserve oil levels of just around 405 million barrels or 57 percent of storage capacity, down from almost 580 million barrels in February before the invasion of Ukraine and more than 650 million at the height of the first coronavirus wave in the spring of 2020.
The emergency powers of the Strategic Petroleum Reserve have been called upon rarely since its creation in the 1970s. The Energy Department lists only three instances where supply disruptions became so dire the President ordered a release: Hurricane Katrina in 2005, Operation Desert Storm in 1991 and during the Arab Spring in 2011, when oil stopped flowing from Libya and other countries. Biden had also ordered the release of 50 million barrels in late 2021, when fuel prices were already rising. All of these sales were significantly smaller, however, than the ongoing 2022 releases. The reserve is also engaging in non-emergency releases, for example for budget or upkeep reasons. Common during natural or other disasters are loans from the reserve to battered companies that repay the barrels with interest.
According to The New York Times, the reserve will be replenished when lower oil prices around $70 a barrel allow. As of Tuesday, a barrel of WTI crude was still trading for more than $80.
