The nation's emergency crude oil stockpile is facing increasing pressure due to major drawdowns for geopolitical crises.
Auditors from the Government Accountability Office concluded that the reserve's capacity for handling new crises is compromised. According to a May GAO report, Energy Department officials described the reserve's aging network of pipelines, caverns, and tanks as being held together "with 'Band-Aids,' and that it is uncertain how long they will hold."
"The SPR's drawdown, distribution and fill capabilities are currently limited and are at risk going forward due to longstanding issues with aging infrastructure compounded with ongoing major construction intended to address them," the GAO warned in the report.
In March, after Iran blocked shipments through the Strait of Hormuz, President Trump ordered 172 million barrels to be drawn from the SPR. According to the Energy Department, federal stockpiles decreased by 3.7 million barrels in the latest week, bringing the total to roughly 308 million barrels. Once Trump's ordered withdrawal is completed, the reserve is projected to shrink to approximately 243 million barrels, per Energy Information Administration data. The authorized capacity of the emergency stockpile stands at 714 million barrels.
Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter
The remaining deployable barrels are further reduced by the 103 million that are currently inaccessible, meaning that effectively only about 205 million barrels are immediately available.
The GAO reported that over 25% of the reserve "was not available for drawdown due to a combination of construction outages and cavern outages." A July report from Rapidan Energy indicated that at least 103 million barrels are currently inaccessible.
David Goldwyn, former State Department special envoy for energy, stated that the reserve still holds sufficient oil to handle a new emergency. "I'm not worried about the stability of the reserve or our ability to do another drawdown," Goldwyn said.
According to an Energy Department representative speaking to CNBC, the reserve has no mandated minimum operating level. The operational minimum needed "to safely manage the caverns, is around ten percent of capacity - about 70 million barrels," the spokesperson said.
The reserve's crude oil is held in 60 salt caverns located thousands of feet underground at four Gulf Coast facilities. To extract the oil, water is injected into the base of the caverns, forcing the crude upward through wells and into pipelines.
This year's release occurred while stockpiles were still rebuilding after the 2022 Ukraine invasion. In response to the conflict in Europe, President Joe Biden authorized the release of 180 million barrels, the largest in SPR history. Federal auditors described the huge withdrawal as an "unplanned stress test" of the system.
"Every time when you do a drawdown, you accelerate the degradation of the wells themselves and some of the equipment," Goldwyn said. "It's like anything else - you use it a lot, you've got to maintain it."
The Energy Department executed Biden's release "without major equipment failures or crude oil spills," but "doing so was operationally challenging," the auditors said. The operation required what auditors called "triaging of emergency repairs" due to leaking water pumps and pipes. Department of Energy officials informed the GAO that the 2022 drawdown "also highlighted risks to the SPR's capability to repeat a drawdown of similar speed and scale to the 2022 drawdown if directed to do so in the near future."
Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets
