How does SPR work?
The U.S. Strategic Oil Reserve was originally built for emergencies. The stock could be used if the global oil supply is severely disrupted. To date, the United States has released oil on only three occasions due to emergencies: in 1991, during Operation Desert Storm, during the Persian Gulf War, the United States released 17.2 million barrels of oil; In 2005, when Hurricane Katrina devastated oil production in the Gulf of Mexico, 20.8 million barrels were released; And in 2011, the United States and the IAE jointly supplied 60 million barrels of oil when the oil supply to Libya was cut off by the civil war.
But the United States did not just tap the oil supply during the global crisis. The country periodically sells oil from the SPR to companies to test installations or to generate revenue. In addition, the government may use stocks to help companies recover from relatively minor emergencies such as severe weather or traffic problems.
For example, after Hurricane Harvey in 2017, the United States lent 5.2 million barrels of oil to refineries off the coast of the Gulf of Mexico to continue their operations. Such deals, called ‘transactions’, force the company to repay the borrowed oil with interest.
The future of SPR
The role of the US strategic oil supply may change in the coming years. Scott L. of the University of Washington. According to Montgomery, the United States exports more oil than it imports, ushering in a “new era” for reserves. He points out that oil demand is declining due to global efforts to reduce CO2Emissions and the question is, how important is it for the country to maintain an emergency presence.
But the United States is not always expected to continue to export more oil than it imports, and SPR supporters argue that it is important to stockpile to deal with suffering such as rising oil prices and international unrest. They argue that as the world is on the brink of an energy crisis, supply may need to be higher than ever.
However, environmentalists argue that the volatility of global oil markets precisely why the United States should stop relying on the SPR. The country consumes about 20 million barrels of crude oil a day, which means it will run out of supplies in a month if the United States has no other source of oil. They argue that the country should invest in electric cars, buses and other green energy initiatives.
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