Filling the Strategic Oil Reserve

Every day, the US pours 50,000 barrels of sweet crude oil into salt caverns in Texas and Louisiana. It's part of our Strategic Oil Reserve to be used in case of war or other emergencies.

Theoretically, it contains enough crude oil to meet our energy needs for about 3 months. We have periodically tapped into the reserve to stablize the market, most recently following Hurricane Katrina.

The reserve had been depleted somewhat so the government has once again begun to add to our stocks. This has elicited complaints from some quarters because in such a tight market as we find ourselves today, the government pumping oil into underground storage facilities only increases the price.

But there may be another reason to fill the reserve; expected cut offs of oil from the Middle East as a result of bombing Iran's nuclear facilities:

U.S. officials say they aren't continuing to fill the reserve with a particular contingency in mind. The U.S. decided to create a petroleum reserve system right after the 1973-74 Arab oil embargo, and began filling the first salt caverns in 1977.

The Energy Department now describes the reserve as "a significant deterrent to oil import cutoffs and a key tool of foreign policy." The reserve has been tapped in the past for emergencies. During the 1990-91 Gulf War, the government pulled 21 million barrels. President Bush opened the spigots in 2005, after Hurricane Katrina caused massive damage to oil facilities in the Gulf of Mexico in 2005, putting another 21 million barrels on the market. The reserve has also offered to swap or loan oil during limited supply disruptions.
The Reserve is currently at around 694 million bbls which is close to its statutory limit of 723 bbls. The Administration expects to meet that target by the end of next year.

But the Energy Department is going ahead with plans to expand the Reserve to a billon bbls while the President would eventually like to see it at 1.5 billion.
 
Does the filling of the Reserve indicate that war with Iran is just a matter of time? Certainly it helps the United States to have the SOR as a backup in case the President feels it necessary to attack Iran. The Iranians could use a variety of methods to cut off our access to Middle Eastern oil including closing the narrow Straits of Hormuz through which around 80% of Gulf oil is shipped.

One more sign that things are heating up in the Persian Gulf.

Hat Tip: Ed Lasky
Every day, the US pours 50,000 barrels of sweet crude oil into salt caverns in Texas and Louisiana. It's part of our Strategic Oil Reserve to be used in case of war or other emergencies.

Theoretically, it contains enough crude oil to meet our energy needs for about 3 months. We have periodically tapped into the reserve to stablize the market, most recently following Hurricane Katrina.

The reserve had been depleted somewhat so the government has once again begun to add to our stocks. This has elicited complaints from some quarters because in such a tight market as we find ourselves today, the government pumping oil into underground storage facilities only increases the price.

But there may be another reason to fill the reserve; expected cut offs of oil from the Middle East as a result of bombing Iran's nuclear facilities:

U.S. officials say they aren't continuing to fill the reserve with a particular contingency in mind. The U.S. decided to create a petroleum reserve system right after the 1973-74 Arab oil embargo, and began filling the first salt caverns in 1977.

The Energy Department now describes the reserve as "a significant deterrent to oil import cutoffs and a key tool of foreign policy." The reserve has been tapped in the past for emergencies. During the 1990-91 Gulf War, the government pulled 21 million barrels. President Bush opened the spigots in 2005, after Hurricane Katrina caused massive damage to oil facilities in the Gulf of Mexico in 2005, putting another 21 million barrels on the market. The reserve has also offered to swap or loan oil during limited supply disruptions.
The Reserve is currently at around 694 million bbls which is close to its statutory limit of 723 bbls. The Administration expects to meet that target by the end of next year.

But the Energy Department is going ahead with plans to expand the Reserve to a billon bbls while the President would eventually like to see it at 1.5 billion.
 
Does the filling of the Reserve indicate that war with Iran is just a matter of time? Certainly it helps the United States to have the SOR as a backup in case the President feels it necessary to attack Iran. The Iranians could use a variety of methods to cut off our access to Middle Eastern oil including closing the narrow Straits of Hormuz through which around 80% of Gulf oil is shipped.

One more sign that things are heating up in the Persian Gulf.

Hat Tip: Ed Lasky