Oil prices go up as surely as they go down, almost always catching us off guard. Just last summer, Americans were paying $3.70 a gallon for gasoline, and crude oil had soared to $115 per barrel due to the rise of ISIS in Iraq and geopolitical tensions in places such as Russia and Ukraine. The United States and its allies surely considered SPR releases in the event the global market got any worse.
Oil markets remain volatile, Americans are vulnerable to global unrest at the pump, and the SPR is our only viable short-term defense.
We may want to reconsider the size and configuration of the SPR, and maybe even its purpose, in the current changing global oil market. We cannot, however, treat the reserve like a bottomless source of offsets.
This valuable crude was instrumental in helping protect our economic and national security interests during the first Gulf War, Hurricanes Katrina and Rita, Libyan unrest in 2011, as well as smaller events like weather and accident-related disruptions to oil transport. And while U.S. production has increased, oil production worldwide remains concentrated in unstable and often unfriendly countries.
Tensions in the Middle East are high, with the rise of ISIS and active conflicts in Syria, Iraq, and Yemen. Russia, the world’s largest energy exporter, continues to use energy as a weapon against our allies. Venezuela, a significant supplier of oil to the United States, is experiencing a worsening economic and political crisis. A disruption in any of these key producer countries could cause oil prices to skyrocket.
While U.S. production has increased, oil production worldwide remains concentrated in unstable and often unfriendly countries.
When a major supply interruption occurs anywhere in the world, it affects oil and gasoline prices at home. As our only short-term option, we need the SPR to protect against major disruptions. Bringing new oil production online takes months or years, and rationing gasoline is economically painful and politically unviable.
It is irresponsible to raid the SPR without also paying to fix its basic infrastructure to ensure it works when we need it. While many have argued that the reserve is larger than necessary to meet our energy security needs, the debate is irrelevant if we fail to make the investments needed to fix the broken system on which it relies.
A 2014 SPR test sale confirmed that distribution infrastructure now constrained by the boom in U.S. oil production could make it difficult to get crude to market in the event of a supply interruption. The Department of Energy’s Quadrennial Energy Review estimated that upgrading the SPR would cost $1.5 billion–$2.0 billion, allowing it to remain the vital tool that it is.
If a break in supply prompts oil prices to spike next summer, those who left the SPR broken may hear some tough questions from Americans facing the consequences at the pump, as well as those responsible for protecting us from outside threats.
It is imperative that this Congress, like those before it, makes the investments needed to ensure the SPR can do the job we designed it for, and do it well.
While the total volume of the SPR is important, being able to efficiently and effectively distribute its inventory in times of crisis is paramount. Even if the recent decline in U.S. oil imports suggests a smaller overall reserve could be sufficient, we cannot afford to have an emergency supply that chokes off when we need it the most.
The SPR is vital to the strength of our economy and national security—a first line of defense against supply disruptions that could happen any time without warning. For over four decades, there has been bipartisan support for keeping this energy security asset at the ready. It is imperative that this Congress, like those before it, makes the investments needed to ensure the SPR can do the job we designed it for, and do it well.