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Who is Strategic Petroleum Reserve (SPR)?
Strategic Petroleum Reserve (SPR) refers to oil stockpiles or inventories held by the government of a particular nation to help reduce energy costs, protect the economy and maintain national security during the crisis. The SPR assures access to oil supply in cases of natural disaster, security issues and other events.
SPR, the largest known emergency supply in the world, is necessary to make up for shortfalls due to disruptions in supply or sudden splurges in consumption. Strategic reserves seal the anticipated gap between supply and demand and help establish parity on an enduring basis.
Generally, SPRs include a proportionate mix of crude oil and petroleum products and are strategically located with appropriate delegations for use by the military and civilians.
Besides the United States, the other 29 member countries in the International Energy Agency (IEA), including the United Kingdom, Germany, Japan and Australia, are required to hold oil in emergency reserves equivalent to 90 days of net oil imports. Japan has one of the largest reserves after China and the United States.
When and why was the SPR created?
The SPR, the world's largest supply of emergency crude oil, was established by the US federal government in the 1970s primarily to reduce the impact of disruptions in supplies of petroleum products.
The reserves are maintained by the United States Department of Energy (DOE) and stored in caverns located in salt domes along the Texas and Louisiana Gulf coasts with a capacity of 714 million barrels. As of 2021, there are roughly 605 million barrels of petroleum in America's Strategic Petroleum Reserve.
The United States created the SPR in December 1975 in response to the Arab oil embargo of 1973 and 1974 and acts as an insurance policy against potential interruptions in US petroleum supplies, whether originating from domestic or international supply disruptions, natural disasters, sabotage, or acts of terrorism.
Under a 1974 treaty with 29 countries forming the International Energy Agency, the US agreed to hold inventories equal to at least 90 days of net crude and petroleum product imports. Under IEA rules, the UK, too, is obliged to hold the equivalent to 90 days of net imports — recently they were equivalent to around 4 million tonnes.
How does SPR release oil to the market?
According to the Energy Department, the SPR can ship as much as 4.4 million barrels of oil per day and it can take only 13 days after a presidential decision for the first oil shipment to reach the US market.
Highest inventory
The SPR was filled to its then 727 million barrel authorised storage capacity on December 27, 2009; the inventory of 726.6 million barrels was the highest ever held in the SPR.
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