In response to high oil prices, some Members of Congress are
urging the President to release oil from the Strategic Petroleum
Reserve (SPR). This would be a mistake and would not significantly
affect the long-term oil market. The SPR was designed to be an
emergency oil supply should foreign sources be cut off, not as a
means of providing short-term relief to energy consumers.
Meanwhile, Congress continues to keep off limits domestic sources
that could potentially produce 100 times more oil than the SPR
contains. To address high oil and gasoline prices, Members of
Congress should stop wasting time on SPR grandstanding and focus
instead on expanding access to domestic sources of oil.
The SPR, created after the 1973-1974 Arab oil embargo, is a
federally maintained petroleum stockpile intended to make up for
any shortfall caused by a temporary supply disruption. This could
include another embargo, a major outbreak of hostilities in the
Middle East, a successful terrorist attack against Saudi Arabian
oil facilities, or anything that slashes production or prevents
tankers from getting through. During such events, the SPR could be
tapped until the problem is resolved and supplies are restored.
After 30-plus years, the SPR has yet to be used for its intended
purpose, but it has been tapped on several occasions for small
amounts after hurricanes and other domestic disruptions in oil
The SPR currently contains nearly 700 million barrels, which are
stored underground in several sites in Louisiana and Texas. Its use
falls under the discretion of the President.
The SPR has supporters and critics. Supporters argue that its
very existence has deterred oil-rich, anti-American governments
from attempting any temporary cutoffs, because they know that the
SPR allows the U.S. to wait them out. Critics argue two points: The
fungibility of the international market for oil erases the need for
an SPR; and, the cost of maintaining the stockpile could rival or
exceed the economic damage it supposedly prevents.
The SPR: No Solution to High
The SPR was meant as an alternative source to make up for a
discreet supply disruption, and not as a means of flooding the
market in times of high prices. Yet politicians, especially with
consumers' anger at the pump in recent years, have been tempted to
tap the SPR or to at least criticize the President for refusing to
do so. With oil having recently reached the $100 per barrel mark,
and gasoline remaining well above $3.00 per gallon, Congressional
calls to release oil from the SPR have increased.
But the SPR is not up to the task of making oil cheaper--at
least not for very long. The world uses about 86 million barrels of
oil per day, and U.S. consumption accounts for 21 million barrels
of that total. Relative to this, the 700 million barrels in the SPR
is not very much. Granted, an extra 3 to 4 million barrels per day
would lower prices, but the SPR could maintain that pace for no
more than six months. After that, the price of oil would likely
return to its previous level, and the SPR would be empty and thus
no longer available for its intended purpose as an insurance policy
against a supply disruption. It would then take many years to
refill the SPR.
Other Sources of Domestic Oil
The SPR is not additional oil that could be introduced into the
marketplace; it is 700 million barrels previously taken out of the
marketplace and stored for an emergency. The real answer is to
unlock the United States' genuinely new sources of domestic
Recent studies conducted by the Department of the Interior
estimate that federal lands contain more than 20 billion barrels of
untapped oil--most of which is currently off limits--and that
another 20 billion barrels exist in federally restricted offshore
areas. It should be noted that initial energy estimates often prove
to be low--sometimes by a wide margin. Thus, the amount of
federally restricted domestic oil is well into the tens of billions
of barrels--and could be upwards of 100 times more than the amount
of oil in the SPR.
Unlike the SPR, which can be tapped in a matter of weeks, it
would take years to bring this new oil online. But the process
could have begun many years ago. In 1995, President Clinton vetoed
a bill that would have opened up a small portion of Alaska's Arctic
National Wildlife Refuge (ANWR) to production. The U.S. Geological
Survey estimated that this area of only a few thousand acres could
contain 10 billion barrels of crude. If Clinton had signed the
bill, ANWR would presently be the source of an estimated one
million barrels per day, and unlike the SPR, it could maintain that
pace indefinitely. Other onshore and offshore supplies could
increase domestic production by another several million barrels per
day for decades to come.
Some legislators get it backwards: They support opening the SPR
but have denounced opening ANWR and other new sources of domestic
production, arguing that the latter is insufficient to make any
The federal restrictions on domestic access accumulated over
time; many during a long span from the late 1980s through the 1990s
when oil was cheap and additional supplies were not seen as
critical. But times have changed. Not only has the demand for oil
increased, but the environmental risks of accessing it have also
declined. State-of-the-art drilling technologies greatly reduce the
above-ground footprint as well as the risk of spills. All new
drilling would be subject to stringent requirements.
Even with high prices likely to persist throughout 2008,
Congress refuses to seriously consider altering the existing access
restrictions on petroleum production. Tapping the SPR is not a
solution, and proponents of doing so should focus instead on these
far more promising sources of domestic energy.
Ben Lieberman is Senior Policy
Analyst for Energy and Environment in the Thomas A.
Roe Institute for Economic Policy Studies at The Heritage