For four decades the U.S. government has stored vast seas of crude oil in underground caverns along the Texas and Louisiana Gulf Coast, providing a backstop in the event the world’s oil supply is disrupted.
But The Houston Chronicle reports that as those facilities age and the need for such a large reserve seemingly wanes, the U.S. Strategic Petroleum Reserve faces a significant reduction in size, a potential shift in purpose and hundreds of millions of dollars in repairs and upgrades to its storage and transportation systems.
The sale of more than 160 million barrels of oil—close to a quarter of the entire reserve—has been authorized by Congress.
As that oil is sold off over the next nine years, the money generated by those sales will fund everything from deficit reduction to highway construction to maintenance of the reserve, which is nearing the end of its intended life.
Meanwhile, the U.S. Department of Energy is wrapping up a yearlong review of the program to determine not only if the reserve is too large, but also whether it should remain in its current locations.
The review will also examine whether the nation’s energy security would be better served by storing gasoline and other refined products rather than crude oil. Significant quantities of the reserve have been sold before to ease potential shortages and moderate prices. But energy analysts say these latest moves represent a significant shift in U.S. energy policy.
Kevin Book, managing director of the Washington-based consulting firm ClearView Energy Partners, says the combination of the Obama administration’s advocacy of more gasoline reserves and Republicans’ desire to generate revenue through oil sales represents a major shift from the government’s historical push to grow the nation’s oil stockpile.
“They’re selling a fifth of the nation’s oil security and only a small part of that is going to preserve the asset,” he says.
