The Strategic Petroleum Reserve:
Authorization, Operation, and
Drawdown Policy
Anthony Andrews
Specialist in Energy and Defense Policy
Robert Pirog
Specialist in Energy Economics
April 25, 2012
Congressional Research Service
7-5700
www.crs.gov
R42460
CRS Report for Congress
Pr
epared for Members and Committees of Congress

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The Strategic Petroleum Reserve: Authorization, Operation, and Drawdown Policy

Summary
Congress authorized the Strategic Petroleum Reserve (SPR) in the Energy Policy and
Conservation Act (EPCA) of 1975 to help prevent a repetition of the economic disruption caused
by the 1973-1974 Arab oil embargo. EPCA specifically authorizes the President to draw down
the SPR upon a finding that there is a “severe energy supply interruption.” The meaning of a
“severe energy supply interruption” has been controversial. The authors of EPCA intended the
SPR only to ameliorate discernible physical shortages of crude oil. Historically, increasing crude
oil prices typically signal market concerns for supply availability. However, Congress
deliberately kept price trigger considerations out of the President’s SPR drawdown authority
because of the question about what price level should trigger a drawdown, and the concern that a
price threshold could influence market behavior and industry inventory practices. As a member of
the International Energy Agency─a coalition of 28 countries─the United States agrees to support
energy supply security through energy policy cooperation, commit to maintaining emergency
reserves equal to 90 days of net petroleum oil imports, develop programs for demand restraint in
the event of emergencies, and participate in allocation of oil deliveries among the signatory
nations to balance a shortage.
The Department of Energy (DOE) manages the SPR, which is comprised of 62 underground
storage caverns that were solution-mined from naturally occurring salt domes located at four sites
in Texas and Louisiana. The 2005 Energy Policy Act directed SPR expansion to its authorized
capacity of 1 billion barrels, but the SPR’s physical expansion has not proceeded beyond 727
million barrels. The SPR’s maximum drawdown capability is 4.4 million barrels per day, based
on the capacity of the pipelines and marine terminals that serve it. Legislation restricts SPR sales
to no more than 30 million barrels over a 60-day period for anything less than a severe energy
supply interruption.
Congress initially appropriated funds to fill the SPR through crude oil purchases, but ended that
practice in 1994. In 2000, the Department of Energy began acquiring oil to fill the SPR through
the royalty-in-kind (RIK) program. In lieu of paying cash royalties on Gulf of Mexico leases,
producers diverted a portion of their production volume to the SPR. The Secretary of the Interior
administratively terminated the RIK program in 2009.
The DOE has conducted sales and loans of crude oil from the SPR for several different reasons.
The 1990 Energy Policy and Conservation Act Amendments expanded SPR drawdown authority
to include responding to short-term supply interruptions stemming from situations internal to the
United States. U.S. Presidents have authorized emergency sales of SPR crude to meet IEA
obligations during the 1990 Persian Gulf War, in the aftermath of Hurricanes Katrina and Rita in
2005, and after a prolonged disruption of Libyan crude in 2011. In addition to these emergency
sales, the Department of Energy has released oil, from time-to-time, to test the SPR system, make
loans to help refiners bridge temporary supply disruptions, and sold oil at the direction of
Congress to generate revenue for budget deficit reduction.
The 30.64 million barrel SPR sale in 2011 reduced the SPR’s inventory from 726.6 million
barrels to 695.9 million barrels. The SPR currently holds the equivalent of 80 days of import
protection (based on 2012 data of 8.72 million barrels per day of net petroleum imports).
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Contents
Introduction...................................................................................................................................... 1
Background─Creating the SPR ....................................................................................................... 1
International Energy Agency Obligation......................................................................................... 2
SPR Drawdown Authorities............................................................................................................. 3
Severe Energy Supply Interruption Emergencies...................................................................... 3
Severe Domestic Energy Supply Interruption ........................................................................... 4
Test Sale .................................................................................................................................... 4
SPR Sites ......................................................................................................................................... 4
Bryan Mound............................................................................................................................. 6
Big Hill ...................................................................................................................................... 6
West Hackberry......................................................................................................................... 6
Bayou Choctaw ......................................................................................................................... 6
SPR Capacity............................................................................................................................. 7
SPR Releases ................................................................................................................................... 8
1990-1991 Severe Energy Supply Interruption─Desert Storm Desert Shield......................... 11
2005 Severe Domestic Energy Supply Interruption─Hurricanes Katrina and Rita ................ 12
2011 IEA Coordinate Release in Response to Libyan Crude Oil Curtailment........................ 13
Other Policy Considerations .......................................................................................................... 13
Refining Capacity vs. Crude Supply ....................................................................................... 14
Gasoline Price Increases 2012................................................................................................. 16
The Future of U.S. Imports of Crude Oil ................................................................................ 17
112th Congress SPR Legislation .................................................................................................... 17
Proposals in the 112th Congress ..................................................................................................... 18

Figures
Figure 1. Strategic Petroleum Reserve............................................................................................. 5

Tables
Table 1. Strategic Petroleum Reserve Inventory as of 2012............................................................ 6
Table 2. Strategic Petroleum Reserve History of Crude Oil Releases Summary ............................ 9

Contacts
Author Contact Information........................................................................................................... 19
Acknowledgments ......................................................................................................................... 20

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Introduction
As Iran threatens to block the Strait of Hormuz, rising crude oil prices have once again led to
calls for releasing oil from the Strategic Petroleum Reserve (SPR).1 The Strait of Hormuz is a key
artery of the global oil market. Persian Gulf oil exporters—Iraq, Kuwait, Saudi Arabia, Iran, the
United Arab Emirates, and Qatar—shipped about 17 million barrels per day (MMb/d) of oil
through the Strait in 2011, which is roughly 20% of the global oil market and 35% of seaborne
trade.2 In 2010, the United States imposed economic sanctions that targeted Iran’s energy and
banking sectors, and have affected its ability to export crude oil and import refined petroleum
products.3 Additional legislation prohibits expending SPR appropriations on anyone engaged in
providing refined products to Iran, or assisting Iran in developing additional internal capacity to
refine oil.4 For further information on Iran’s threat, refer to CRS Report R42335, Iran’s Threat to
the Strait of Hormuz, coordinated by Kenneth Katzman and Neelesh Nerurkar.
Despite the recent rising prices and the blockade threat, markets have not experienced supply
shortages. Considerable new capacity has come online, and adequate excess capacity exists
worldwide, particularly in Saudi Arabia. However, the fear is that excess capacity may not be
adequate to make up losses from a blockade; an event that U.S. Navy would not tolerate.5 New
resource development in North Dakota (Bakken Formation) and Ohio (Utica Formation) add to
U.S. capacity. Extending the southern section of the Keystone pipeline to the Gulf Coast would
increase world access to Canadian resources. Until the last quarter of 2011, the United States had
experienced both a drop in crude oil demand and reduced refining output. The United States has
also increased its exports of refined products. Selling SPR oil may have a short term influence on
global crude oil prices, but a limited (if any) influence on long term prices.
Background─Creating the SPR
From the mid-1970s through the present day, the United States has had to absorb a number of
significant spikes in the price of crude oil and petroleum products.6 Whether driven by

1 The Strait of Hormuz is the narrow waterway that forms the entrance to the Persian Gulf form the Gulf of Oman and
ultimately the Arabian Sea.
2 Energy Information Administration, U.S. Department of Energy, The Strait of Hormuz is the world’s most important
oil transit chokepoint, Today in Energy, January 4, 2012, http://www.eia.gov/todayinenergy/detail.cfm?id=4430#.
3 The Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (P.L. 111-195).
4 The FY2010 Energy and Water Appropriations Act (P.L. 111-85).
5 Barbara Starr and Phil Gast, “U.S. Navy won't tolerate ‘disruption through Strait of Hormuz,” CNN U.S., December
28, 2012, http://articles.cnn.com/2011-12-28/middleeast/world_meast_iran-us-hormuz_1_strait-iran-hormuz?_s=
PM:MIDDLEEAST.
6 These have included the Arab oil embargo (1973-1974), the deposing of the Shah of Iran, followed by the Iranian
revolution (1979-1980), the first Gulf War (1990), and production cuts by the Organization of the Petroleum Exporting
Countries (OPEC) and a resurgence in world oil demand (early 1999 into the fall of 2000). Starting in 2003 with the
U.S. invasion of Iraq, crude oil and product prices began rising to a new nominal high reached in the summer of 2008
for a range of reasons, which are discussed in CRS Report R42024, Oil Price Fluctuations, by Neelesh Nerurkar and
Mark Jickling. Some of the dynamics behind more recent prices are linked to natural events (such as Hurricanes Rita,
(continued...)
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disruptions in the physical supply of crude or refined fuels, unexpected demand growth, or by
uncertainties owing to international conflicts and instabilities, these price increases have
consequences for the United States. Elevated petroleum prices affect the balance of trade and
siphon away disposable income that might support local economies, investment, or savings.
The SPR came about because of the 1973 Arab-Israeli War. In reaction to the United States’
support for Israel, the Organization of Arab Petroleum Exporting Countries (OAPEC) imposed an
oil embargo on the United States, the Netherlands, and Canada, and reduced production. While
some Arab crude did reach the United States, the price of imported crude oil rose from roughly
$4/barrel (bbl) during the last quarter of 1973 to an average price of $12.50/bbl in 1974.
In response to the 1973 oil embargo, Congress created a Strategic Petroleum Reserve of up to 1
billion barrels in the Energy Policy and Conservation Act (EPCA) of 1975.7 The SPR was meant
to contain enough crude oil to replace net imports for 90 days, with a requirement initially to store
150 million barrels. In May 1978, Congress authorized expansion of the SPR’s physical capacity
to 750 million barrels, and in 2005 directed further expansion to the authorized size of 1 billion
barrels.8 The George W. Bush Administration unsuccessfully attempted to persuade Congress of
the need to expand the SPR to 1.5 billion barrels.
Congress intended the SPR to help prevent a repetition of the economic disruption that the 1973
Arab oil embargo had caused. While no amount of strategic stocks can insulate an oil-consuming
nation from paying the market price for oil in a supply emergency, the availability of strategic
stocks can help mitigate the magnitude of the market’s reaction to a crisis. One of the original
perceptions of a strategic stockpile’s value was that it would discourage the use of oil as a
political weapon. OAPEC intended to create a physical supply disruption with their embargo.
Congress’s motivation in creating the SPR focused especially on a deliberate and dramatic
physical oil supply disruption and on mitigating the significant economic impacts of a shortage
stemming from international events. In the event of a supply interruption, proponents reasoned
that introducing oil into the U.S. market from the SPR would offset the lost supply and in doing
so help calm markets, mitigate sharp price spikes, and reduce economic disruptions (i.e., gross
domestic product loss). The SPR would also buy time for the crisis to sort itself out or for
diplomacy to seek some resolution before a potentially severe oil shortage escalated the crisis.
International Energy Agency Obligation
The Arab oil embargo also fostered the establishment of the International Energy Agency (IEA)
to develop plans and measures for emergency responses to energy crises. Strategic stocks are one
of the policies included in the agency’s International Energy Program (IEP). IEA member

(...continued)
Katrina, and Gustav) that disrupted Gulf Outer Continental Shelf (OCS) oil production and the 2010 BP Macondo well
blowout that resulted in a moratorium on OCS drilling permits. The latest rise, at the time of this paper, may depend on
how events in Iran play out.
7 P.L. 94-163, Section 154 Strategic Petroleum Reserve Plan.
8 The Energy Policy Act of 2005, P.L. 109-58 Section 301 Permanent Authority to Operate the Strategic Petroleum
Reserve and Other Energy Programs.
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countries, including the United States are committed to maintaining oil stocks (inventories)
equivalent to 90 days of its prior year’s net imports, developing programs for demand restraint in
the event of emergencies, and agreeing to participate in allocation of oil deliveries to balance a
shortage among IEA members.9 In 2011, the United States participated in a coordinated IEA
drawdown in response to the shutdown of Libyan oil exports. (See below.) At its current
inventory of 696 million barrels, the SPR provides the United States roughly 80 days of net
import protection and meets the 90-day IEA obligation though the inclusion of industry-held oil
stocks. At the full drawdown rate of 4.4 MMb/d, the SPR can deliver crude oil for 90 days,
dropping to a rate of 3.8 MMb/d for an additional 30 days, and dropping further in drawdown rate
for up to 180 days as stocks deplete.10 These measures of days of protection assume a total
curtailment of oil supply to importing nations, a scenario that is highly unlikely. This would be
especially true for the United States, given that Canada is currently the nation’s largest foreign
source for crude oil.
Some IEA member nations require a certain level of stock holding by the private sector or by
both the public and private sectors. The private oil sector holds roughly 60% of IEA stocks,
whereas governments and supervisory agencies hold the remaining 40%.11 (The U.S. federal
government holds 100% of the SPR stock.)
SPR Drawdown Authorities
Presidential authority to authorize a drawdown depends on making the determination that a
severe supply interruption exists nationally or internationally, or is imminent. The United States
is obligated to join in an IEA coordinated response. In the case of an international interruption,
the President may release an unlimited volume of crude oil. In the case of a national interruption,
some statutory limitations apply. The Secretary of Energy also has limited authority to release
crude oil for a test drawdown.
Severe Energy Supply Interruption Emergencies
The Energy Policy and Conservation Act (EPCA, P.L. 94-163) authorized drawdown of the
Reserve upon a finding by the President that there is a “severe energy supply interruption.” By
the statute, such an interruption exists when the President determines that
1. an emergency situation exists and there is a significant reduction in supply which
is of significant scope and duration;
2. a severe increase in the price of petroleum products has resulted from such
emergency situation; and

9 IEA member countries are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Japan, Republic of Korea, Luxembourg, the Netherlands, New Zealand,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States. See
http://www.iea.org/about/membercountries.asp.
10 Personal communication, Diana Greenhalgh, DOE SPR Program Analyst, April 18, 2012.
11 See http://www.iea.org/Textbase/subjectqueries/keyresult.asp?KEYWORD_ID=4103.
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3. a price increase is likely to cause a major adverse impact on the national
economy. 12
Severe Domestic Energy Supply Interruption
Congress enacted additional drawdown authority in the 1990 Energy Policy and Conservation Act
Amendments (P.L. 101-383) after the Exxon Valdez oil spill, which interrupted the shipment of
Alaskan oil, triggering spot shortages and price increases. The intention was to provide for an
SPR drawdown under a less rigorous determination than EPCA mandated. This provision
authorized the President to use the SPR for domestic energy supply shortages without having to
declare a “severe energy supply interruption” or the need to meet obligations of the United States
under the international energy program.13
Under the additional authorities in P.L. 101-383, the President can initiate a drawdown in the
event of a circumstance that “constitutes, or is likely to become, a domestic or international
energy supply shortage of significant scope or duration” and where “action taken ... would assist
directly and significantly in preventing or reducing the adverse impact of such shortage.” This
authority limits SPR sales to no more than 30 million barrels over a maximum 60-day period only
when the SPR inventory is above 500 million barrels.
Test Sale
By law, the Secretary of Energy must periodically evaluate SPR drawdown and sale procedures,
and carry out a test drawdown and sale, or exchange of petroleum products from the reserve, up
to 5 million barrels. 14
SPR Sites
The SPR physically comprises four sites, two in Texas and two in Louisiana (Figure 1). The sites
offer access to both marine terminals and pipeline systems needed for moving crude oil to and
from the SPR. Each site consists of an underground salt dome (a naturally occurring geologic
structure), solution-mined to create storage caverns. Stored crude oil is removed by injecting
water to displace the oil. The cavern remains structurally intact as long as the stored oil remains
in place. In the event of multiple sales or exchanges over time, repeated water injections will
cause salt leaching and begin to compromise the structural integrity of the caverns.15
The SPR’s storage capacity had expanded to 727 million barrels, and its inventory had reached
nearly 700 million barrels before Hurricanes Katrina and Rita in 2005. Following the storms,

12 42 U.S.C. §6241 (a).
13 42 U.S.C. §6241 (h).
14 42 U.S.C. §6241 (g).
15 Oil stored at a fifth SPR site, Weeks Island, LA, was transferred and the site was decommissioned in 1996 because of
problems with the structural integrity of the cavern unrelated to drawdown activity.
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DOE loaned some crude oil to refiners and sold some through competitive bidding. Borrowers of
SPR oil are required to repay their loans “in-kind” with a premium, essentially returning a larger
amount of oil than borrowed.16 The SPR reached its maximum fill of 727 million barrels by 2010
(through royalty-in-kind acquisition) and remained at that level until the 2011 drawdown reduced
the inventory to 695 million barrels.17 The SPR currently holds the equivalent of 80 days of
import protection (based on 2012 import data of 8.72 million barrels per day of net petroleum
imports). Table 1 shows the current SPR inventory level, accounting for the 30 million barrels
sold in the summer of 2011.

Figure 1. Strategic Petroleum Reserve

Source: DOE Strategic petroleum Reserve Annual Report for Calendar Year 2010.

16 Details and current levels of SPR inventory are updated regularly at http://www2.spr.doe.gov/DIR/SilverStream/
Pages/pgDailyInventoryReportViewDOE_new.html.
17 DOE Notice of Sale DE-NS96-11PO97000.
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Table 1. Strategic Petroleum Reserve Inventory as of 2012
(million barrels)
Site
Sweeta Sourb Totalc
Bryan Mound, Brazoria County, Texas
67.5
176.4
253.9
Big Hill, Jefferson County, Texas
62.8
97.4
170.2
West Hackberry, Cameron Parish, Louisiana
109.7
108.0
227.8
Bayou Choctaw, Iberville Parish, Louisiana
21.7
51.8
73.6
Subtotal Underground Inventory
261.8
433.5
725.4
Tanks and Pipelines
0.7
0.4
1.2
Total Inventory
262.6
434.0
695.9
Source: DOE, Strategic Petroleum Reserve Annual Report for Calendar Year 2010 minus quantities noted in
DOE Notice of Sale DE-NS96-11PO97000.
Notes:
a. Sulfur content not exceeding 0.5%.
b. Sulfur content greater than 0.5%.
c. Total does not add due to rounding.
Bryan Mound
The Bryan Mound storage site is located in Brazoria County, TX, approximately three miles
southwest of Freeport. The site has 20 storage caverns with a total storage capacity of 254 million
barrels, and a cavern inventory of 240.7 million barrels. The Bryan Mound site began operation in
1986 and has remained operational since then.
Big Hill
The Big Hill storage site is located in Jefferson County, TX, approximately 26 miles southwest of
Beaumont. The site has 14 storage caverns, a combined storage capacity of 171 million barrels,
and a cavern inventory of 164.7 million barrels. The Big Hill site began full operation in 1991
and has remained operational since then.
West Hackberry
The West Hackberry storage site is located in Cameron Parish, LA, approximately 25 miles
southwest of Lake Charles. The site has 22 storage caverns with a combined storage capacity of
228 million barrels, and a cavern inventory of 215.8 million barrels. The West Hackberry site
began full operation in 1988 and has remained operational since then.
Bayou Choctaw
The Bayou Choctaw storage site is located in Iberville Parish, LA, approximately 12 miles
southwest of Baton Rouge. The site has six storage caverns, an authorized storage capacity of 74
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million barrels, and a cavern inventory of 73.6 million barrels. The Bayou Choctaw site began
full operation in 1987 and has remained operational since then.
In October 2007, Bayou Choctaw’s authorized cavern capacity temporarily decreased from 76
million barrels to 73.5 million barrels. Bayou Choctaw Cavern 20 had crept to within 60 feet of
the salt dome’s edge and required replacement due to the risk of breaching the salt dome.18 The
cavern passed all integrity tests and remains out of any immediate danger of leaking, however. To
limit any risk, DOE reduced the oil stored in Cavern 20 from 7.5 million barrels to 3.2 million
barrels by using only the upper portion of the cavern. DOE temporarily stored Cavern 20’s oil in
the Big Hill and West Hackberry caverns. Instead of physically expanding the caverns, additional
storage space came from displacing the brine cushion at the bottom of the two caverns. The brine
cushion helps counteract naturally occurring cavern creep that results from the salt dome’s
geological deformation. In November 2011, DOE acquired a 10-million-barrel replacement
cavern, designated Cavern 102, in the Bayou Choctaw salt dome. The replacement cavern’s
development is scheduled for integration into the Bayou Choctaw system by January 2013.
Cavern 102’s completion will increase the site’s capacity by 2.5 million barrels; replacing a 7.5
million barrel cavern with a 10 million barrel cavern. Plans then call for emptying and
decommissioning Cavern 20.19
SPR Capacity
The Energy Policy Act of 2005 (EPAct) required expansion of the SPR to a maximum physical
capacity of 1 billion barrels “as expeditiously as practicable.” Advocates for expansion argued
that the SPR would need to be larger for the United States to be able to maintain stocks equivalent
to 90 days of net imports. DOE evaluated a site in Richton, MS, as a possible location for an
additional 160 million barrels of capacity. However, in FY2011, the Obama Administration
cancelled SPR expansion plans, citing an Energy Information Administration projection that
“U.S. petroleum consumption and dependence on imports will decline in the future and the
current Reserve’s projection will gradually increase to 90 days by 2025.”20
The SPR is designed with a drawdown rate of roughly 4.4 million barrels per day for up to 90
days; thereafter, the rate would begin to decline. Drawdown is limited by the capacity of the
takeaway capacity of pipelines and marine terminals servicing the SPR. The first major
drawdown in early 1991 (the Persian Gulf War) confirmed SPR’s operability. A life extension
program, initiated in 1993, upgraded or replaced all major systems to ensure the SPR’s readiness
to 2025.
The SPR’s current capacity remains physically limited to 727 million barrels, with current
inventory at 696 million barrels. Refilling the SPR after an ordered drawdown remains a

18 Personal communication with David Johnson, DOE Deputy Assistant Secretary for Petroleum Reserves, March 7,
2011.
19 On March 1, 2011, Senators Jack Reed and Sheldon Whitehouse urged President Obama to sell the oil from the
Bayou Choctaw cavern rather than move it to a new cavern as proposed by DOE.
20 Department of Energy, “Cancellation of Supplemental Environmental Impact Statement for Ancillary Facilities for
the Richton Site of the Strategic Petroleum Reserve,” 76 Federal Register 55890, September 9, 2011.
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presidential discretion, presumably at a time when the price of crude oil declines, or political and
market conditions make it economically advantageous to do so.
The initial crude oil that filled the SPR came from purchases paid though appropriated funds. As
an alternative to appropriated funds, DOE proposed accepting transfer of a discrete portion of the
royalties payments collected by the Department of the Interior (DOI) for Gulf of Mexico oil
leases in the form of royalty-in-kind (RIK) oil rather than as revenues. While RIK avoids the
necessity of making outlays for purchasing oil, it also meant a loss of revenues in settling
royalties in wet barrels rather than in cash payments to the U.S. Treasury. DOI worked out final
details during the late 1999 and 2001. The RIK program was used to transfer oil to the SPR to
replace oil sold in the mid-1990s for deficit reduction purposes. In mid-November of 2001,
President Bush ordered the SPR filled to 700 million barrels, principally through oil acquired as
RIK. Between 1999 and 2009, RIK deliveries totaled roughly 162 million barrels and forgone
receipts to the U.S. Treasury, an estimated $6.49 billion. In 2009, Secretary of the Interior Ken
Salazar announced that he was ending the RIK program.21
Without the planned Richton site, even if the RIK program resumed, no additional capacity exists
to store additional crude oil beyond the 727 million barrels.
SPR Releases
DOE sells SPR oil through competitive bidding. It publishes a “notice of sale” that includes the
volume, characteristics, and location of the petroleum for sale; delivery dates and procedures for
submitting offers; as well as measures for assuring performance and financial responsibility. Bids
are reviewed by DOE and awards offered.22 DOE estimates that oil could enter the market
roughly two weeks after the appearance of a notice of sale.23
To date, the SPR has released over 160 million barrels for various purposes (Table 2). Presidents
have ordered releases on three occasions, some 63 million barrels in total, in response to severe
energy supply interruptions in coordination with other IEA member countries ─ the SPR’s
original intent. On eleven other occasions, DOE has lent oil (nearly 68 million barrels in total) to
mitigate temporary supply interruptions. The borrowers repaid their loans by replacing the crude
oil and added a small volume as a premium. On two occasions, sales generated revenue as a
budget deficit reduction tool, as did the initial 1985 Weeks Island test sale.
The Clinton Administration introduced a new dimension to SPR drawdown and sale with its
proposal in its FY1996 budget to sell 7 million barrels to help finance the SPR program. While

21 U.S. Department of the Interior, Secretary Salazar Ends Controversial Royalty in Kind Program, http://www.doi.gov/
news/radioactualities/2009_09_16_actuality.cfm.
22 10 C.F.R. §625.
23 See http://www.fe.doe.gov/programs/reserves/spr/spr-facts.html. For more detail on the sales procedure, see U.S.
Federal Register, Department of Energy, Price Competitive Sale of Strategic Petroleum Reserve Petroleum; Standard
Sales Provisions: Final Rule, July 27, 2005, pp. 39363-39382; available at http://www.fe.doe.gov/programs/reserves/
spr/spr_rule_070705.pdf. DOE has a history of SPR drawdowns, sales, and exchanges on the web at
http://www.fe.doe.gov/programs/reserves/spr/spr-drawdown.html.
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agreeing that a sale of slightly more than 1% of SPR oil would not cripple U.S. emergency
preparedness, some in Congress vigorously opposed the idea, in part, because it might establish a
precedent that would bring about additional sales of SPR oil for purely budgetary reasons, as did
indeed occur. There were three sales of SPR oil during FY1996. The first was to pay for the
decommissioning of the Weeks Island site. The second was for reducing the federal budget
deficit, and the third was to offset FY1997 appropriations. The total of 28.1 million barrels sold
raised revenues of $544.7 million. Since then, the Obama proposed selling SPR oil to reduce
deficit spending in FY2011.
EPCA authorities permit “exchanges” of oil for the purpose of acquiring additional oil for the
SPR. Under an exchange (also sometime referred to as a loan), a company borrows SPR crude
and later replaces it, including an additional quantity of oil as a premium for the loan. There were
seven exchanges between 1996 and 2005. In June of 2006, after a temporary closure of a ship
channel blocked crude oil shipments to two refineries, ConocoPhillips and CITGO borrowed
750,000 barrels of sour crude from the SPR and later replaced it plus additional “premium”
barrels. In Fall 2008, the SPR conducted a test exchange to address shortages that resulted from
damages to petroleum infrastructure from Hurricanes Gustav and Ike.
Some of the events precipitating major releases are discussed below.
Table 2. Strategic Petroleum Reserve History of Crude Oil Releases Summary
(sale or exchange in barrels)
Budget
Deficit
Date Purpose
Sale
Reduction
Exchange
1985 -
Test Sale
967,000

November
After extending the Energy Policy and Conservation Act
in June 1985, Congress authorized DOE to conduct test
sales of up to 5 million barrels to involve the private
sector in the competitive sales process.
1990 -
Desert Shield
3,900,000

October
President George H. W. Bush, ordered a 5-million-barrel
test sale to “demonstrate the readiness of the [Reserve]
system under real life conditions.” Only 3.9 million barrels
sold because of the lack of bids for one of the six types of
crude oil advertised.
1991 -
Desert Storm
17,300,000

January
President Bush authorized a 33.75 million barrel
drawdown over a 45-day period under a coordinated
emergency response plan drawn up by the International
Energy Agency. DOE accepted bids from 13 companies
that bid on only 17.3 million barrels of Reserve oil
because industry offers for the higher-sulfur “sour” crude
oil were substantially lower than bids for the lower-sulfur
“sweet” crude.
1996 -
Weeks Island Sale
5,100,000

March
After becoming geological y unstable, DOE decided to
decommission the Weeks Island SPR Site, and offered 5.1
million barrels for sale.
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Budget
Deficit
Date Purpose
Sale
Reduction Exchange
1996 -
Pipeline Blockage, Seaway Pipeline System

900,416
April
During a pipeline blockage to Cushing, OK, ARCO paid a
fee plus a future price differential for leasing the oil, and
replaced the oil with an equivalent grade of crude within
six months under an emergency crude oil lease exchange
agreement.
1996 - May
Deficit Reduction
12,800,000

Omnibus Consolidated Rescissions and Appropriations
Act of 1996, P.L. 104-134.
1996 -
Deficit Reduction
10,200,000

October
Omnibus Consolidated Appropriations Act of 1997, P.L.
104-208.
1998 -
Maya Exchange

11,000,000
August
DOE exchanged 11million barrels of Maya crude for 8.5
million barrels of other higher value crude oil to improve
the SPR’s operational efficiency.
2000 - June Calcasieu Ship Channel Closure

1,000,000
DOE exchanged 500,000 barrels each with CITGO and
Conoco, due to blockage of the ship channel that allowed
incoming crude oil shipments to those refineries. Action
taken in order to avert temporary shutdown of both
refineries.
2000 -
Establish NEHHOR

2,836,000
August
DOE exchanged 2.8 million barrels of crude oil to pay for
the first year of tank-storage and stocks for establishing a
2-million-barrel Northeast Home Heating Oil Reserve.
2000 -
Exchange 2000

30,000,000
October
DOE exchanged 30 million barrels in response to concern
over low distillate levels in Northeast.
2002 -
Hurricane Lilli

98,000
October
DOE exchanged 98,000 barrels with Shel Pipeline Co. to
secure Capline storage tanks in advance of Hurricane Lili.
2004 -
Hurricane Ivan

5,400,000
September
DOE exchanged 5.4 million barrels of sweet crude due to
disruptions in the Gulf of Mexico caused by Hurricane
Ivan.
2005 -
Hurricane Katrina
11,000,000
9,800,000
September
President George W. Bush issued a Finding of a Severe
Energy Supply Interruption as defined in section 161(d) of
the Energy Policy and Conservation Act (EPCA - 42
U.S.C. 6 241(d)) and directed DOE to offer 15 million
barrels of sweet crude and 15 million barrels of sour
crude as part of an IEA coordinated effort. 10.8 million
barrels of sweet crude and 200 thousand barrels of sour
crude sold.
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Budget
Deficit
Date Purpose
Sale
Reduction Exchange
2006 -
Barge Accident, Sabine Neches Ship Channel

767,000
January
DOE exchanged 767,000 barrels of sour crude with Total
Petrochemicals USA due to closure of the Sabine Neches
ship channel to deep-draft vessels after a barge accident in
the channel. Action was taken to avert temporary
shutdown of the refinery.
2006 - June Calcasieu Ship Channel Closure

750,000
DOE exchanged 750,000 barrels of sour crude with
ConocoPhillips and Citgo due to the closure for several
days of the Calcasieu Ship Channel to maritime traffic.
The closure resulted from the release of a mixture of
storm water and oil. Action was taken to avert temporary
shutdown of both refineries.
2008 -
Hurricanes Gustav and Ike

5,389,000
September
Following Hurricanes Gustav and Ike, DOE loaned nearly
5.4 million barrel to Marathon, Placid, ConocoPhillips,
Citgo and Alon USA after their supplies had been cut off
due to shutdown of the petroleum industry in the Gulf
region. The companies repaid the loans with a premium
of 93,350 barrels.
2011 – July
IEA Coordinated Release

President Obama issued a Finding of a Severe Energy
Supply Interruption and directed DOE to offer 30 million
barrels of sweet crude as part of an IEA coordinated
effort to offset Libya’s production curtailment.
30,640,000

Total to date
68,907,000
23,640,000 67,940,416
Source: U.S. DOE http://fossil.energy.gov/programs/reserves/spr/spr-drawdown.html
Notes: Barrels rounded to thousands.
1990-1991 Severe Energy Supply Interruption─Desert Storm
Desert Shield
In the aftermath of the Iraqi invasion of Kuwait on August 2, 1990, escalating gasoline prices and
the prospect of a worldwide crude shortfall (approaching 4.5 million-5.0 million barrels daily)
prompted calls for an SPR drawdown. The debate focused on whether SPR oil should be used to
moderate anticipated price increases, before oil supply problems had become physically evident.
The George H. W. Bush Administration indicated that it would not draw down the SPR in the
absence of a physical shortage simply to lower prices. On the other hand, some argued that a
perceived shortage does as much immediate damage as a real one, and that flooding the market
with stockpiled oil to calm markets is a desirable end in itself. From this perspective, the best
opportunity to use the SPR came during the first months of the crisis, which some argued the
Administration squandered. It became clear during the fall of 1990 that in a decontrolled market,
physical shortages are less likely to occur. Instead, an expression of supply shortages comes in
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the form of higher prices, as purchasers are free to bid as high as they wish to secure scarce
supply.
Within hours of the first air strike against Iraq in January 1991, the White House announced that
President Bush was authorizing a drawdown of the SPR, and the IEA activated the plan on
January 17. Crude prices plummeted by nearly $10/barrel in the next day’s trading, falling below
$20/bbl for the first time since the original invasion. Oil analysts attributed the price drop to
optimistic reports about the allied forces’ crippling Iraqi air power and the diminished likelihood,
despite the outbreak of war, of further jeopardy to world oil supply. There appeared to be no need
for the IEA plan and the SPR drawdown to help settle markets, and there was some criticism of it.
DOE offered more than 30 million barrels of SPR oil for bid, but only accepted bids on 17.3
million barrels. Successful bidders took oil delivery in early 1991.
The Persian Gulf War drawdown provided an important example about ways to maximize the
SPR’s usefulness in decontrolled markets. Legislation enacted during the 101st Congress (P.L.
101-383), as previously noted, had expanded SPR drawdown authority by allowing its use in
preventing minor or regional shortages from escalating into larger ones; for example, the
shortages on the West Coast and price jump that followed the Alaskan oil spill of March 1989. In
the 102nd Congress, omnibus energy legislation (H.R. 776, P.L. 102-486) broadened the
drawdown authority further to include instances where a reduction in supply appeared sufficiently
severe to bring about an increase in the price of petroleum likely to “cause a major adverse
impact on the national economy.”
2005 Severe Domestic Energy Supply Interruption─Hurricanes
Katrina and Rita
Prior to 2005, growth in worldwide oil demand had begun to constrain U.S. refinery production,
particularly as the demand for gasoline and refined products increased with an expanding
economy. Hurricane Katrina followed by Hurricane Rita had severe and far-reaching affects on
the U.S. petroleum. Each approaching hurricane caused production facilities in the Gulf of
Mexico to shut down. The operations of the refining and distribution systems were interrupted
once the hurricanes made landfall. Within two days of the devastation, DOE approved emergency
loans of 9.8 million barrels of crude oil from the SPR to refineries whose supplies had been cut.
The EIA then announced that its member countries had agreed to a coordinated emergency
response to make 60 million barrels of crude oil and refined products available to help mitigate
the disruptions in the flow of oil worldwide. DOE offered 30 million barrels for sale and executed
sales contracts for 11 million barrels. Together with the loans, the SPR released 20.8 million
barrels. The other EIA member countries released 8.8 million barrels of crude oil and 18.53
million barrels of refined petroleum products, for a total 27.33 millions barrels, into the market.
The EIA-released refined products, in particular, benefited the East Coast, which normally
depended on Gulf Coast refineries. Receipts to the U.S. Treasury SPR Petroleum Account for 11
million barrels sold totaled $615.3 million. The 9.8 million barrels loaned to the petroleum
industry were repaid to the SPR along with 500,000 additional premium barrels.
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2011 IEA Coordinate Release in Response to Libyan Crude
Oil Curtailment
In its FY2012 Budget Request, the Obama Administration had proposed a $500 million sale of
petroleum from the SPR, proposed for completion by March 1, 2012, for deposit in the General
Fund of the Treasury. The House Energy and Water Committee recommended the $500 million
sale provided that the quantity sold would be replaced during FY2012 under paragraph (a)1 or 3
of Section 160 of the Energy Policy and Conservation Act (42 U.S.C 6240 (a)(1) or (3)), which
authorizes acquisition of crude oil produced from federal lands, or through purchase or exchange,
respectively.
However, political unrest that began in Tunisia and spread to Egypt and Libya in early 2011 had
led to the surge in oil prices observed during the first quarter of the year. To offset the loss of
Libyan exports, calm markets, and to moderate prices, some Congressional Members called for
releasing oil from the SPR. Some reasoned that an oil release from the SPR would dampen
speculative bidding that was driving the market, and would reduce prices in the short run.
By early March 2011, the price of West Texas Intermediate (a light sweet crude) traded on the
New York Mercantile Exchange (NYMEX) exceeded $100 per barrel. In Europe, the price of
Brent crude oil (a heavier and higher in sulfur crude than WTI) exceeded $115 per barrel. These
prices (approximately 20% higher than before the outbreak of political unrest) reflected at least
two important factors: first, expectations that the unrest could spread to other countries (some of
which could be major oil producers), and second, an actual curtailment of Libyan exports (to an
uncertain extent and for an unknown duration). As an offset to the lost Libyan crude exports,
Saudi Arabia indicated that it would expand its exports to keep the world market supplied.
On June 23, 2011, the International Energy Agency (IEA) announced that its 28 member
countries would release 60 million barrels of crude oil and refined products into the global
market. As part of that action, the President directed a drawdown of the SPR to meet the U.S.
response obligations for 30 million barrels, and DOE issued a Notice of Sale and that same day.
On June 24, 2011, DOE opened its web-based Crude Oil Sales Offer System for a five-day sale of
30.237 million barrels of light, sweet crude oil at a bid reference price of $112.78 a barrel.24 DOE
received more than 90 offers for SPR crude oil, awarded 28 contracts to sell 30.64 millions
barrels of crude oil at an average price of $107.21 per barrel. The oil was sold from the Bryan
Mound and Big Hill sites in Texas, and the West Hackberry, LA, site.
Other Policy Considerations
In a market where there is no physical shortage, oil companies may have limited interest in
purchasing SPR oil unless they have spare refining capacity to turn the crude into useful products,

24 The bid reference price is determined by the average five-day price of Louisiana Light Sweet Crude oil traded prior
to the Notice of Sale. Offers are submitted against the price and, as the sale progresses, bids will reflect market
conditions. Under the terms of the SPR’s Standard Sales Provisions, final prices are not determined until delivery to
purchaser has been completed.
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or want to build crude oil stocks.25 The U.S. government bases its notice of sale on the previous
five-day average of the price of the grade of crude oil it intends to sell, and accepts bids it
considers responsive. If the notice itself does not prompt, or contribute to, a softening of prices,
there may be limited interest on the part of the oil industry in bidding on SPR supply. Although
the possibility exists that prices might decline if additional refined product is released into the
market, it is impossible to predict what quantitative effect an SPR crude drawdown would have.
For example, following the June 23, 2011, announcement of a 30 million barrel release of oil
from the SPR, daily oil prices briefly declined from $94.96 per barrel to $90.70, and then returned
to their previous levels within a week.
There are additional considerations. A unilateral drawdown on U.S. strategic stocks would
probably have less impact on the world oil market than a coordinated international drawdown of
the sort that occurred after the 2011 release to meet IEA obligations vis-à-vis Libya’s production
curtailment. Some might argue that it would be unwise under any scenario for the United States
to draw down its strategic stocks while other nations continue to hold theirs at current levels.
Additionally, it is always possible that producing nations will reduce production to offset any
SPR oil delivered into the market. In the setting of 2012, some might argue that the market is
already well supplied and that short-term supply concerns are not keeping prices high, but current
and anticipated geopolitical events are contributing to higher prices. Others argue that the oil
commodity futures market is behind speculative bidding that is driving prices higher and may be
adding as much as $23 to the price of barrel of oil.26
Some have perceived the SPR as a defensive policy tool against high oil prices. If an SPR release
has no discernable impact on oil prices, it is possible that the SPR will lose some of whatever
psychological advantage it exercises on prices when left as an untapped option.
Refining Capacity vs. Crude Supply
The number of U.S. refineries that process crude oil into fuels (this includes three refinery
complexes each made up of two formerly independent refineries) is decreasing. In 2010, CRS
reported 124 refineries operating with over 18 million barrels per day in capacity. Since then four
refineries have closed, or will close, in the United States. The closures would decrease U.S.
refining capacity by more than 1 million b/d. HOVENSA announced in January 2012 that it is
permanently closing its 350,000 b/d refinery in St. Croix, Virgin Island.27 Sunoco announced
plans to close two Pennsylvania refineries, the 175,000 b/d Marcus Hook refinery and the
335,000 b/d Philadelphia Refinery if buyers cannot be found for them. ConocoPhillips has also
announced plans to sell or shutter its 185,000 b/d Trainer refinery in Pennsylvania.28 Most of the

25 Refining capacity utilization rates are 83.7% for the first quarter of 2012, about 1.3% higher than the same period in
2011 taking into account seasonal maintenance and other events that will take refinery units offline temporarily. See
Table 2 at http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html.
26 George Lobsenz, “Speculation Upping Prices by 56 Cents A Gallon—CFTC Member,” IHS The Energy Daily, vol.
40, no. 48 (March 9, 2012).
27 HOVENSA, “HOVENSA Announces Closure of St. Croix Refinery,” press release, January 12, 2012,
http://www.hovensa.com/.
28 Jeffrey Kerr and Anna Driver, “Conoco to sell or shut Pennsylvania Refinery,” Reuters, September 27, 2011,
http://www.reuters.com/article/2011/09/27/us-conocophillips-trainer-idUSTRE78Q5R320110927.
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country’s gasoline is refined in the Gulf Coast region (Petroleum Administration for Defense
District 3), which makes up nearly 45% of the U.S. refining capacity through 45 refineries
processing more than 8 million barrels per day. These refineries also represent some of the largest
and most complex refineries in the United States, if not the world. Over the last 25 years, the
ºAPI gravity of imported crude oils has been decreasing, while average sulfur content has been
increasing. ºAPI gravity, a measure developed by the American Petroleum Institute, expresses the
“lightness” or “heaviness” of crude oils on an inverted scale. With a diminishing supply of light,
sweet (low sulfur) crude oil, U.S. refineries have had to invest in multi-billion dollar processing-
upgrades to convert lower-priced heavier, sour crude oils to high-value products such as gasoline,
diesel, and jet fuel.
The Government Accountability Office (GAO) observed in 2006 that the proportion of grades of
oil in the SPR was not as compatible as it could be with refineries moving towards being able to
handle heavier grades of crudes.29 Based on a 2005 SPR crude oil compatibility study, DOE
agreed that the SPR could store a small percentage of heavy crude to satisfy the short-term needs
of a few refineries in the event of a supply disruption. However, the current mix of crudes was
compatible for use in the majority of refineries, and DOE suggested considering the addition of
heavy crude for any future expansion of the SPR.30
GAO observed that 40% of the crude oil refined by U.S. refineries was heavier than that stored in
the SPR. Refineries that process heavy oil cannot operate at normal capacity if they run lighter
oils. Refiners reported to GAO that running lighter crude in units designed to handle heavy crudes
could impose as much as an 11% penalty in gasoline production and 35% in diesel production.
The agency reported that other refiners indicated that they might have to shut down some of their
units. The types of oil currently stored in the SPR would not be fully compatible with 36 of the 74
refineries considered vulnerable to supply disruptions. (A majority of the refineries that have
pipeline access to the SPR are located in the Gulf Coast region and the Midwest region.) GAO
cited a DOE estimate that U.S. refining throughput would decrease by 735,000 barrels per day (or
5% of total U.S. refining capacity) if the 36 refineries had to use SPR oil—a substantial reduction
in the SPR’s effectiveness during an oil disruption, especially if the disruption involved heavy oil.
In response to the 2006 GAO report, DOE agreed to consider storing heavy crudes if an
opportunity were to occur through expansion. However, the expansion plans were cancelled in
2011. In addition, since 2006, the SPR updated its crude compatibility study and concluded in its
2010 report that storing heavy crude in the SPR would not provide a net benefit in the event of a
supply disruption.31

29 U.S. Government Accountability Office, Strategic Petroleum Reserve—Options to Improve the Cost-Effectiveness of
Filling the Reserve, GAO-08-512T, February 26, 2008, http://www.gao.gov/new.items/d08521t.pdf.
30 Personal communication with Diana Greenhalgh, DOE SPR Program, April 18, 2012.
31 Office of Deputy Assistant Secretary for Petroleum Reserves, Strategic Petroleum Reserve Updated Crude
Compatibility Study, Department of Energy, April 2010.
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Gasoline Price Increases 2012
Over the first two months of 2012, retail gasoline prices increased by over 15%. The price of
gasoline rose from an average price of $3.21 per gallon in late December 2011 to a price of $3.64
in late February. Prices continued to go up, rising to a U.S. average of $3.92 per gallon as of
March 26. 32 With these higher prices came calls for, and against, the release of crude oil from the
SPR as a way to control price increases. For further information on gasoline prices, refer to CRS
Report R42382, Rising Gasoline Prices 2012, by Neelesh Nerurkar and Robert Pirog.
Although there is recognition that a release from the SPR would likely only provide temporary
relief from rising prices, some view it as a signal to the market that a continuing spiral of prices
would be met by resolve and policy action by the United States. The judgment that a release of
crude oil from the SPR provides only temporary relief from rising prices seems well founded. On
June 23, 2011, when gasoline prices were at $3.60 a gallon, President Obama announced a 30
million barrel release from the SPR under IEA obligation. The price of gasoline declined by about
2% over the next two weeks following the SPR release announcement, but by July 8, 2011, the
price had again reached $3.61 per gallon, approximately the same level as before the release.
Gasoline prices continued to rise through the first week of August, before declining later that
month. Gasoline prices averaged about $3.60 per gallon in August, declining to $3.40 per gallon
in October and $3.21 per gallon in December. The gasoline price reductions in the 4th quarter of
2011 are likely related to the reductions in crude oil prices between August and October 2011,
given the lag between acquiring title to crude oil and the oil becoming available as retail gasoline,
as well as refineries switching production from summer to winter grade gasoline.
Crude oil prices also responded immediately to the release of oil from the SPR. The price of oil
was $94.96 per barrel on June 22, 2011.33 On June 23, the day President Obama announced the
SPR release, the price fell to $90.70 per barrel. By June 30, 2011, the price had risen to $95.73
per barrel, exceeding the price before the announcement. The initial market response to the SPR
release lasted about one week. However, the announcement of the SPR release promised to
deliver the oil to market by the end of August. The price of oil began to decline in August 2011
and generally declined during August and September, until reaching $75.40 per barrel on October
4, 2011. Thereafter, prices began to rise, exceeding $100 per barrel later in the year.34
The gasoline price increases of 2012, like virtually all previous price increases, stem from an
increase in the price of crude oil. Crude oil price increases generally result from actual or
anticipated market tightening, that is, an increase in demand, a reduction in supply, or both. For
example, many viewed the price increases of 2008 as related to the rapid expansion of petroleum
demand in China, India, and other emerging markets. In 2011, the price increases were thought to
be largely attributable to the loss of Libyan production during the revolution in that country. In

32 Gasoline prices in this section are for Energy Information Administration, conventional regular gasoline. Available at
http://www.eia.doe.gov.
33 The price of crude oil used in this section is the West Texas Intermediate spot price. The data is available at
http://www.eia.doe.gov.
34 Definitive conclusions concerning the relationship between the release of oil from the SPR, changes in the price of
oil, and changes in the price of gasoline are imprecise. Many other factors may have also affected the prices during the
period, either reinforcing or moderating the effect of the SPR release.
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2012, although there are some reductions in supply due to instability in South Sudan, Yemen, and
other areas, the primary driver of higher prices seems to be tensions with Iran and related policy
responses by both sides in the controversy over Iranian nuclear capability.
This environment, where current supplies are uninterrupted but speculation concerning future
availability is active, may appear to some observers to be a situation that a release from the SPR
would do little to mitigate. For example, if Iranian military action succeeded in blocking the Strait
of Hormuz, it would prevent over 17 million barrels per day of crude oil from reaching the
market. This quantity is almost four times the size of the maximum drawdown capability of
the SPR, if acting alone. However, an event of such size would almost certainly trigger an
international response and a coordinated release of crude oil and products from the United States
as well as the 27 other IEA member countries.
As the nature of the response to Iran’s nuclear development project evolves, and especially if it
results in reduced actual supplies of oil on the world market, a drawdown from the SPR might
become more effective in reducing oil prices. However, until an actual reduction in supply
materializes, releases from the SPR are unlikely to resolve speculative concern on the oil markets.
For more on the increase in gasoline prices, including causes and related issues, see CRS Report
R42382, Rising Gasoline Prices 2012, by Neelesh Nerurkar and Robert Pirog.
The Future of U.S. Imports of Crude Oil
The ability of the SPR to supplement the domestic U.S. supply of crude oil and effectively
replace imports depends on the size of the reserve as well as its drawdown capabilities. Its
effectiveness also depends on the volume of U.S. imports and the rate of U.S. consumption.
Crude oil imports are the difference between U.S. demand and domestic production. If either
demand falls, or domestic production rises, the need for imports declines. Because of a number of
factors, some temporary, including the recession, high prices, and conservation, U.S.
consumption of petroleum products has declined since 2005 by about 9.5%. This decline in
consumption has reduced the demand for crude oil. Over the same period, U.S. production of
crude oil increased from 5.18 million b/d to 5.67 million b/d, an increase of 9.5%. The
combination of falling consumption and increasing production has reduced the share of imports in
total consumption from 49% in 2005 to 45% in 2011. In addition, Canada increasingly provides
the United States with crude oil imports, and arguably represents a secure source of supply.
If the trends of the last six years continue, the U.S. will rely less on crude oil imports.
Consequently, the SPR, even if its capacity and contents remain fixed, may be better able to meet
U.S. requirements in times of supply shortage on the world market.
112th Congress SPR Legislation
The FY2011 Continuing Resolution (P.L. 112-10) had funded the SPR at $123.1 million,
including a rescission of $71.0 million from prior year appropriations. For FY2012, the
Administration requested $121.7 million. The Administration also proposed a sale of $500
million in petroleum from the SPR no later than March 1, 2012, for deposit in the General Fund
of the Treasury. The House Appropriations Committee recommended the $500 million sale
provided that the quantity sold was replaced during FY2012 under paragraph (a)1 or 3 of Section
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160 of the Energy Policy and Conservation Act (42 U.S.C 6240 (a)(1) or (3)), which authorizes
acquisition of crude oil produced from federal lands, or through purchase or exchange,
respectively. Both recommendations preceded the Administration’s June 23, 2011, announced
sale of 30 million barrels.
The Consolidated Appropriations Act, 2012 (P.L. 112-74) makes appropriations for FY2012 to
DOE for energy and science programs, including the SPR as well as the SPR Petroleum Account
and the Northeast Home Heating Oil Reserve. The House Appropriations Committee
recommended $192.7 million for FY2012 ($69.5 million above FY2011 and $71 million above
the budget request). The Senate Appropriations Committee recommended the same funding, and
the final bill appropriated that amount. The final bill also included a rescission of $500 million, a
reduction from the receipts of the 2011 sale, rather than proposing an additional sale of reserves.
Proposals in the 112th Congress
In the 112th Congress, Members have introduced a number of bills that, among other things,
propose expanding the SPR to include a refined petroleum product reserve. Arguments in favor of
establishing a refined product reserve are that U.S. oil imports include refined products and that it
could be more efficient and calming to markets if a supply of refined products were available in
an emergency to supplement SPR crude oil releases (that would have to first be refined into
products before delivery to U.S. consumers). The benefits that SPR crude might have on
moderating price increases could be reduced if refineries or the oil pipelines carrying crude oil to
refineries were compromised. The availability of refined product reserves would address that
scenario. Having a regional product reserve would also lessen the possibility that delivery of
crude or product from the stocks of IEA signatories might overwhelm U.S. port facilities; this
happened in the wake of the European response that followed Hurricanes Katrina and Rita.
Arguments against a product reserve include the prospect that the availability of supplemental
supplies of gasoline from abroad may increase as European demand for diesel vehicles displaces
gasoline consumption there. Additionally, storage of refined product is more expensive than for
crude. Storage of crude in salt caverns is estimated to cost roughly $3.50/barrel per year while
aboveground storage of product in tanks might cost $15-$18/barrel per year. Refined product will
also deteriorate over time and would need to be periodically sold and replaced to assure the
quality of the product held for extended storage in the product reserve. Many states and regions
also use different gasoline blends, adding to the complexity of identifying which blends should be
stored where, and in what volume.
H.R. 142, National Strategic Gasoline Reserve would require the Secretary of Energy to set
aside 10 million barrels of refined gasoline products similar to the Northeast Home Heating Oil
Reserve.
H.R. 1017, Enhanced Supply and Price Reduction Act of 2011 or Enhanced SPR Act would
amend the Energy Policy and Conservation Act to require the Strategic Petroleum Reserve (SPR)
to contain at least 30 million barrels of refined petroleum products. It would direct the Secretary
of Energy (DOE) to: (1) sell at least 30 million barrels of light grade petroleum from the SPR and
acquire refined petroleum product; (2) deposit the cash proceeds from such sales into the SPR
Petroleum Account; and (3) from such deposited proceeds withdraw the amount necessary to pay
for the direct administrative and operational costs of the sale and acquisition, including for
acquisition and maintenance of, and improvements to, storage facilities.
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H.R. 1861, Infrastructure Jobs and Energy Independence Act among other provisions would
require the Secretary of Energy (DOE) to “… publish a plan to exchange a specified amount of
light grade petroleum from the Strategic Petroleum Reserve for heavy grade petroleum plus
additional cash bonus bids that reflect the difference in market value; and (3) set aside net
proceeds from such exchange for the Energy Independence and Security Fund (to be established
by this act).
H.R. 1914, Gas Price Stabilization Act of 2011 would direct the Secretary of Energy to publish
a plan to (1) sell light grade petroleum from the Strategic Petroleum Reserve (SPR) and acquire
an equivalent volume of heavy grade petroleum, (2) deposit the cash proceeds from such sales
into the SPR Petroleum Account established under the Energy Policy and Conservation Act, and
(3) withdraw from such cash proceeds the amount necessary to pay for the direct administrative
and operational costs of the sale and acquisition.
H.R. 1748, Taxpayer and Gas Price Relief Act of 2011 among other provisions would amend
the Energy Policy and Conservation Act to authorize the Secretary of Energy (DOE) to sell at
least 30 million barrels of petroleum from the Strategic Petroleum Reserve (SPR) and acquire
refined petroleum products. It would require the Secretary to deposit the cash proceeds from such
sales into the SPR Petroleum Account. It also would authorize the President to instruct the
Secretary to draw down and sell or exchange petroleum product in a specified amount from the
SPR if a circumstance exists of such significance and scope that action would be warranted to
address market manipulation or otherwise be in the public interest.
H.R. 1807, Enhanced Supply and Price Reduction Act of 2011 or Enhanced SPR Act would
amend the Energy Policy and Conservation Act to require the Strategic Petroleum Reserve (SPR)
to include refined petroleum products within its required capacity of 1 billion barrels of petroleum
products. Furthermore, it would authorize the Secretary of Energy (DOE) to sell at least 30
million barrels of petroleum from the SPR and acquire refined petroleum products; prescribe a
schedule for such transactions; and direct the Secretary to deposit the cash proceeds from such
sales into the SPR Petroleum Account. It would also authorize the President to instruct the
Secretary to draw down and sell or exchange petroleum product from the SPR if a circumstance
exists of such significance and scope that action would be warranted to address market
manipulation or otherwise be in the public interest.

Author Contact Information

Anthony Andrews
Specialist in Energy and Defense Policy
Robert Pirog
Specialist in Energy Economics
aandrews@crs.loc.gov, 7-6843
rpirog@crs.loc.gov, 7-6847



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Acknowledgments
Beth A. Roberts, Information Research Specialist
Neelesh Nerurkar, Specialist in Energy Policy
Diana Greenhalgh, DOE SPR Program Analyst


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