Other sales have been authorised to test the release process, or mandated by Congress for budgetary reasons (“History of SPR releases”, U.S. Presidents have twice ordered emergency drawdowns, in response to the first U.S.-Iraq Gulf War (1991) and Hurricane Katrina (2005).Īnd the White House has once ordered a non-emergency sale, in response to supply interruptions in Libya and other countries (2011), as part of coordinated action with other IEA member states. While the decision is subject to conditions set out in the statute, they are written so vaguely that the president has almost complete flexibility.Ĭongress and the courts have traditionally deferred to the president on national security, so it is unlikely either would constrain a drawdown order. The law authorises the president to direct a drawdown in response to an interruption in physical supplies () or a significant rise in prices that is likely to have a major adverse impact on the economy (). The president has broad authority to order a drawdown in response to a “severe energy supply interruption” under the 1975 Energy Policy and Conservation Act, as amended (PL 94-163). “The Trump administration is actively assessing whether to dip into the country’s emergency oil stocks while it simultaneously pushes other countries to boost output,” the Wall Street Journal reported on July 13.Ī drawdown is not imminent but being considered if increased output from Saudi Arabia and other OPEC members fails to avert another sharp increase in prices, the Journal reported, citing people familiar with the matter.
The United States is considering releasing crude stocks from the SPR, possibly in conjunction with its partners in the International Energy Agency (IEA), according to news reports, to prevent a sharp rise in oil prices. Like a buffer-stock management system, which can even out short-term shifts in supply and demand, but not enduring ones, the SPR is best employed to deal with short-term supply interruptions, not long-term changes. If the SPR release succeeded in holding down prices, it would discourage the rise in production needed to replace lost Iranian barrels, while allowing rapid consumption growth to remain unchecked.ĭeploying the SPR to manage a loss of Iranian oil supplies would ultimately prove self-defeating, and deplete the reserve if pursued for any length of time. In particular, if the purpose is to relieve upward pressure on prices, it would blunt the signal needed to help the market adapt to sanctions. president broad discretion to order a drawdown, and any order is unlikely to be constrained by Congress or the courts.īut the SPR was established to deal with short-term interruptions of crude supplies and is not suited to managing long-term changes in the supply situation. The statutes governing the operation of the SPR grant the U.S. The SPR has sufficient crude to offset any loss of exports from Iran for many months, especially if stock releases are combined with increased oil production by Saudi Arabia and other members of OPEC.
Strategic Petroleum Reserve (SPR) in response to a rise in prices resulting from the reimposition of sanctions on Iran would be a mistake and ultimately self-defeating. LONDON, July 19 (Reuters) - Releasing crude oil from the U.S.
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