Donald Trump, Republican candidate for president in the November election, has promised to replenish the US Strategic Petroleum Reserve immediately if he is elected.
Trump stressed the need for replenishing the SPR in an interview on Fox News Wednesday. The SPR is currently at its lowest levels since 1983.
Trump said, “We must fill the strategic reserve immediately.”
We don’t require energy from other countries. It is time to replenish the strategic reserve. “It is the lowest ever number.”
Strategic Petroleum Reserve: current status
SPR is the largest emergency supply of crude oil in the world. It’s stored within massive salt caves on the Gulf of Mexico coast.
The Organization of Arab Petroleum Exporting Countries’ (OAPEC) 1973-1974 embargo on oil caused severe shortages of oil and a spike in prices.
The US was exposed to disruptions in foreign oil supplies by this embargo. It was a response to the US’s support of Israel during the Yom Kippur War.
On July 26th, the SPR had 375,000,000 barrels of crude oil. This is just a little over half its capacity of 714,000,000 barrels.
To return it to levels during Trump’s presidential term, the US would need to buy nearly 300,000,000 barrels of oil. This will require new funding from Congress.
Trump criticises Biden for using the SPR
Joe Biden, the President of the United States in 2022 will release approximately 180,000,000 barrels to reduce fuel costs following Russia’s invasion and occupation of Ukraine.
Republicans have taken issue with this decision, accusing the Biden Administration of using SPR in order to maintain low gasoline prices during an election season. According to the US Energy Information Administration, US consumers consume about 20 million barrels per day.
Trump criticised Biden’s approach, saying:
He’s trying to lower the price of gasoline by using strategic reserves that are meant to be used for war, for the military and for other important purposes. We can’t let this happen.
Biden Administration has recently taken steps to fill the SPR.
The White House began to fill the SPR in recent weeks by taking advantage of the lower price of oil.
The Department of Energy purchased an additional 4,65 million barrels last week. Saudi Aramco – the largest oil company in the world – stated that they expect these purchases will continue and contribute to a healthy demand for oil over the next few months.
Giovanni Staunovo is a commodities analyst with UBS. He said that Congress had authorized spending for about 15,000,000 more barrels.
Staunovo, in a FT article explained that “properly used strategic oil inventory can reduce volatility of oil prices. It makes sense therefore to keep sufficient high stocks.”
He added that, “Considering the amount of fuel the US uses, it would be more sensible to hold strategic inventories” of refined products.
Trump’s SPR record
Trump’s efforts to fill the SPR were highlighted during his tenure, with Trump saying: “I filled that at levels they had never seen.”
According to the Energy Information Administration, the SPR has been reduced by 57,000,000 barrels under Trump.
In 2020, Trump proposed buying 77,000,000 barrels of oil for reserve because the price had fallen due to the Covid-19 Pandemic. But the Democratic-controlled Congress rejected the $3 billion in funding that would have paid for the purchase, describing it as a subsidy to big oil companies.
Amrita Sen of Energy Aspects pointed out that Congress mandated sales to be made during Trump’s administration to bring the SPR down to 400 million barrels of oil by 2027.
Brent crude oil rose 2.1% to $78.12 on Wednesday, roughly at the level before Trump’s remarks.
In the months to come, the potential of significant purchases for refilling the SPR may influence the oil market and price. This is especially true if Trump’s policies are implemented.
As new information becomes available, this post Trump promises to replenish US Strategic Petroleum Reserve should he be elected President may change.
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