The US Energy Department has announced that it will take several years for the Strategic Petroleum Reserve (SPR) to return to its full capacity. This announcement comes after the SPR’s reserves have already fallen to their lowest levels in 15 months.
The SPR was created by the US government in 1975, in response to the 1973-74 oil embargo that led to an energy crisis and long lines at gas stations all over the country. During this period, some states even imposed restrictions on when drivers could buy fuel based on odd or even license plates. The SPR is listed as an asset on the US government’s balance sheet and is traditionally used as a buffer against shortfalls in global crude supply and potential spikes in oil prices; however, due to current liquidity issues, the government has been forced to sell off some of its reserves just to pay bills, causing concern among investors regarding how China can step up its efforts to increase global demand for oil. Currently, the SPR holds 372 million barrels of crude oil – which is its lowest level since December 1983.
Energy Secretary Jennifer Granholm stated that refilling the reserve would be difficult this year despite previous statements from October suggesting otherwise. These losses have caused further anxiety amongst investors who fear a recession triggered by risks in the banking sector could lead to an even greater drop in demand for oil.