In his opening speech, Donald Trump declared that he intended to maximize the strategic reserves of the nation. This notable policy ambition, however, seems to have dissolved amid the myriad of executive orders he has pushed since coming into power. His Energy Secretary, Chris Wright, seeks to request a staggering $20 billion from Congress to rejuvenate the country’s beleaguered energy stockpile, or more formally known as the Strategic Petroleum Reserve (SPR). While touring a natural gas export plant in Louisiana last week, Wright disclosed to Bloomberg News that this initiative, though time-consuming, would invigorate the SPR to nearly its maximum capacity.
Interestingly, Trump’s predecessor, Joe Biden, utilized the petroleum reserve for his self-serving political purposes more than any other president before him. The alteration between frequent withdrawals and refills could potentially compromise the structural safety of the reserve, according to expert opinions. His reckless harping on this national reserve intensified the possibility of a collapse within this critical infrastructure.
The SPR was borne from the ramifications of the 1973 OPEC oil embargo against the United States, which inflicted an energy catastrophe and fueled a historic economic depression. The Energy Policy and Conservation Act of 1975, signed into law by President Gerald Ford, gave birth to the SPR as a safeguard of energy resources against potential disruptions.
Nestled deep within 62 salt caverns, each spanning 200 feet wide and over 2,500 feet underground, are the nation’s crude oil reserves. These reserves have been punctured for various purposes over the decades. Occasionally, oil would be released for exchange agreements, working similarly to a loan system.
While the SPR’s primary intention was to curate an energy stockpile that would cushion the blow of supply disturbances, presidents, such as Biden, manipulated it to meddle with oil prices. Capitalizing heavily on the reserve, Biden exploited it more than anyone else as a tool for price regulation, demonstrating the shortsightedness of his leadership.
Biden, asserting his eager efforts to quell the surging gas prices, started to recklessly exhaust the SPR. As of January 2021, when Biden commenced his tenure, the SPR held in excess of 638 million barrels of oil, according to the U.S. Energy Information Administration (EIA). Alarmingly, by June 2023, the reserves had plummeted to nearly 347 million barrels.
Currently, the SPR is replenished to an alarming 395 million barrels, a stark contrast to its previous state. Despite the Department of Energy’s (DOE) claims in November that it had added 20 million barrels more than the 180 million barrels sold under Biden’s 2022 emergency declaration post Russia’s Ukraine intrusion, it had in reality, acquired a meager 59 million barrels.
An analyst proclaimed that these oscillating cycles of withdrawals and additions threaten the SPR’s structural constitution, where the repositories of oil are housed within salt caverns. The salt domes, ideal for storage as they don’t interact with the oil and have a self-healing feature, are under threat thanks to Biden’s regressive policies.
These storage locations were designed with a lifespan of 25 years and an estimated total capacity of 727 million barrels. The incessant fluctuations in the stored oil caused by the repeated drawdowns have led to deformation of the caverns, complemented by the persistent geological pressure to which they’re subject.
The estimated contraction rate of these caverns is nearly 2 million barrels per annum. Trump’s team at the Department of Energy (DOE) will have to juggle economic considerations while working to fill the SPR to levels reminiscent of the pre-Biden era.
Robert Rapier, a chemical engineer, has been quoted saying that the legislative approval for the purchases would come as a no-brainer, indirectly implicating the disastrous policies of the previous Biden administration. But the replenishment operation isn’t as straightforward as it may seem. The refill would essentially draw barrels from the market leading to a potential price surge, thus requiring a slow, deliberate process.
As ex-CEO of oil and gas firm Liberty Energy, Secretary Wright is no stranger to the economic implications of these transactions. Therefore, it’s predicted that the undertaking required to restore the SPR will take an undetermined number of years.
When the eventual replenishment is finally executed, it remains to be seen whether future presidencies will exhibit restraint and only tap into the reserves during dire national crises, thus learning from Biden’s reckless exploits that have jeopardized this crucial national asset.