Long Term Strategic Review Of The Us Strategic Petroleum Reserve

The mission of the Strategic Petroleum Reserve (SPR) is to protect the United States (U.S.) from severe petroleum supply interruptions through the acquisition, storage, distribution, and management of emergency petroleum stocks and to carry out U.S. obligations under the International Energy Program. The Long-Term Strategic Review (LTSR) provides an overview of the SPR and addresses key challenges that will impact the SPR’s ability to carry out its energy security mission. As expanding North American crude oil production has substantially reduced waterborne imports into the United States and changed the flow of petroleum, numerous questions have arisen about the future of the SPR. While the threat of physical supply disruptions to the United States has diminished, the country remains connected to the global oil market through the price mechanism and its economy remains vulnerable to supply disruption induced oil price shocks. Major topics examined in this report include the state of the SPR’s surface and subsurface infrastructure, bottlenecks in the North American midstream infrastructure that impact the SPR’s ability to move oil to the market, a discussion of some of the costs and benefits of SPR options, SPR modernization requirements for infrastructure life extension and the addition of dedicated marine terminals, and issues with the SPR’s authorizing legislation, the Energy Policy and Conservation Act (EPCA). These areas are evaluated with consideration given to the Bipartisan Budget Act of 2015 and the Fixing America’s Surface Transportation (FAST) Act, which mandate the sale of an estimated 124 million barrels (MMbbl) of the SPR’s crude oil inventory and authorize the funding of an SPR modernization program through the sale of up to an additional $2 billion worth of oil.

In 1973, the United States and other western countries were shocked by the Arab oil embargo. Lines formed at gasoline pumps; fuel stations ran out of supply; prices skyrocketed; and the nation realized its vulnerability to decisions made by leaders of countries half a world away. In response, the U.S. Strategic Petroleum Reserve (SPR), which was signed into law by President Gerald Ford in 1975, has become the nation?s primary tool of energy policy. Following its first major use during the Persian Gulf War of 1991, officials and policy makers at the highest levels increasingly turned to the SPR to stave off shortages and mitigate rising energy prices. Author and historian Bruce A. Beaubouef examines, for the first time, the interactions that have shaped the development of the SPR. He argues that the SPR has survived because it is a passive regulatory tool that serves to protect energy consumers and petroleum consumption and does not compete with the American oil industry. Indeed, by the late twentieth century, as American import dependency reached new heights, refiners and transporters increasingly relied upon the SPR as a ready resource to help maintain feedstock when supplies were tight or disrupted. In a time of continued vulnerability, this definitive work will be of interest to those concerned with the history, economy, and politics of the oil and gas industry, as well as to historians and practitioners of oil and energy policy.

Contents: (1) History of the Strategic Petroleum Reserve (SPR): Establishment of the SPR; (2) The Drawdown Authorities: Proposals in the 111th Congress to Amend the Authorities; (3) Acquisition of Crude Oil for the SPR: Resumption of Fill (2009); Royalty-in-Kind Acquisition; (4) When Should the SPR Be Used?: The Debate Over the Years; Use of the SPR in the Persian Gulf War (1990); Hurricanes and Changes in the Market Dynamics (2005-2008); The Call for an SPR Drawdown: Summer 2008; (5) Establishment of a Regional Home Heating Oil Reserve.

The Strategic Petroleum Reserve (SPR) was created in 1975 to help protect the U.S. economy from oil supply disruptions and it currently holds about 700 million barrels of crude oil. The Energy Policy Act of 2005 required the Department of Energy to expand the Strategic Petroleum Reserve's maximum storage capacity to 1 billion barrels of crude oil. As the Department of Energy (DOE) begins to expand the SPR, past experiences can help inform future efforts to fill the reserve in the most cost-effective manner. Thus, this book will focus on the factors that experts recommend be considered when filling and using the SPR, to what extent the SPR can protect the U.S. economy from damage during oil supply disruptions and under what circumstances would an SPR larger than its current size be warranted. As part of this book, GAO developed oil supply disruption scenarios, used models to estimate potential economic harm, and convened 13 experts in conjunction with the National Academy of Sciences. This is an edited, excerpted and augmented edition of a GAO and U.S. Department of Energy publication.