Strategic Petroleum Reserve - Effects on Economy
The Strategic Petroleum Reserve (SPR) is the largest reserve of oil in the world.
The United States started the SPR in 1975 after oil supplies were cut off during the 1973-1974 oil embargo to mitigate future disruptions to the nations oil supply.
The reserve located at four sites on the Gulf of Mexico in artificial salt domes up to 1,000 meters below the surface can store up to 727 million barrels of oil.
The reserve can currently protect the U.
S.
from 58 days of supply interruption with a goal of 90 days.
The average price of the oil in the reserve is $28.
42.
Oil can be pumped out of the reserve at the rate of 4.
4 million barrels a day and it takes 13 days for that oil to get to market after the President issues the decision to drawdown the reserve.
Exchanges occur frequently in the reserve to smooth market disruptions, but there must be an event of sufficient scope and duration and be in the public interest in order to issue a directive for a drawdown.
The oil must be replaced with similar quality crude within a reasonable time.
In 2001, President Bush issued a directive to fill the SPR to 700 million barrels of crude oil.
At the time the inventory level stood at 545 million barrels and the price of crude was $22/barrel.
Beginning in 2002 the SPR began receiving its largest daily injection of oil since the 1980-85 timeframe as President Bush began filling the reserve to protect the nation against the possibility of future disruptions of oil due to possible terrorists actions.
The United States has actually significantly decreased its dependence on oil imported from the Middle East in recent years.
Only about 1 million barrels a day of the 21 million per day used comes from the Middle East.
Most of the purchases to the SPR during the buildup came from Mexico, the United Kingdom and the United States.
OPEC as a group supplied less than Mexico during this time.
In August of 2005, the SPR reached 700 million barrels, but after Hurricane Katrina hit it was drawn down by 20.
8 million barrels.
In March of 2007 the Dept.
of Energy announced plans to begin purchases of oil inventory and by April of 2008 the SPR reached 707 million barrels its highest level ever.
The Energy Policy Act of 2005 requires the SPR to be filled to 1 billion barrels and in President Bush's State of the Union address in 2007 he suggested that the SPR will double in size.
Speaker Pelosi called on President Bush in April of 2008 to suspend purchases of oil for the SPR to take the pressure off oil prices as they climbed to $100 per barrel.
On May 12,2008 Representative Peter Welch (D,VT) and 63 Co-Sponsors introduced the Strategic Petroleum Reserve Oil Suspension and Consumer Protection Act to stop purchases to the SPR.
On May 16, 2008 the DOE announced it will halt deliveries to the SPR by July 2008.
President Bush reluctantly signed this bill into law on May 19th.
He was formally opposed to this type of legislation.
The United States started the SPR in 1975 after oil supplies were cut off during the 1973-1974 oil embargo to mitigate future disruptions to the nations oil supply.
The reserve located at four sites on the Gulf of Mexico in artificial salt domes up to 1,000 meters below the surface can store up to 727 million barrels of oil.
The reserve can currently protect the U.
S.
from 58 days of supply interruption with a goal of 90 days.
The average price of the oil in the reserve is $28.
42.
Oil can be pumped out of the reserve at the rate of 4.
4 million barrels a day and it takes 13 days for that oil to get to market after the President issues the decision to drawdown the reserve.
Exchanges occur frequently in the reserve to smooth market disruptions, but there must be an event of sufficient scope and duration and be in the public interest in order to issue a directive for a drawdown.
The oil must be replaced with similar quality crude within a reasonable time.
In 2001, President Bush issued a directive to fill the SPR to 700 million barrels of crude oil.
At the time the inventory level stood at 545 million barrels and the price of crude was $22/barrel.
Beginning in 2002 the SPR began receiving its largest daily injection of oil since the 1980-85 timeframe as President Bush began filling the reserve to protect the nation against the possibility of future disruptions of oil due to possible terrorists actions.
The United States has actually significantly decreased its dependence on oil imported from the Middle East in recent years.
Only about 1 million barrels a day of the 21 million per day used comes from the Middle East.
Most of the purchases to the SPR during the buildup came from Mexico, the United Kingdom and the United States.
OPEC as a group supplied less than Mexico during this time.
In August of 2005, the SPR reached 700 million barrels, but after Hurricane Katrina hit it was drawn down by 20.
8 million barrels.
In March of 2007 the Dept.
of Energy announced plans to begin purchases of oil inventory and by April of 2008 the SPR reached 707 million barrels its highest level ever.
The Energy Policy Act of 2005 requires the SPR to be filled to 1 billion barrels and in President Bush's State of the Union address in 2007 he suggested that the SPR will double in size.
Speaker Pelosi called on President Bush in April of 2008 to suspend purchases of oil for the SPR to take the pressure off oil prices as they climbed to $100 per barrel.
On May 12,2008 Representative Peter Welch (D,VT) and 63 Co-Sponsors introduced the Strategic Petroleum Reserve Oil Suspension and Consumer Protection Act to stop purchases to the SPR.
On May 16, 2008 the DOE announced it will halt deliveries to the SPR by July 2008.
President Bush reluctantly signed this bill into law on May 19th.
He was formally opposed to this type of legislation.
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