The question about US oil inventories continually comes back to “how much oil is left in the Strategic Petroleum Reserve, or SPR?”
I set out to answer that question by doing what I always do: diving deeply into a long, boring report from the Department of Energy.
Let me cut to the chase; at the current rate of drawdown (~9 Mb/week) the SPR has about 11 to 12 weeks left in it. That brings us to the 1st or 2nd week of September.
The report I dove into is 123 pages long and is titled “Long-Term Strategic Review of the U.S. Strategic Petroleum Reserve.” It’s linked there in case you want to read it yourself.
There’s a good bit of complexity and terminology to wade through, but the simple summary is that the very first caverns filled beginning in 1975 (as a response to the Arab oil embargo) were old salt mine caverns. These early caverns are “single cycle” caverns, meaning they can be drawn down once and only once.
Roughly 130 million barrels out of a possible 713 million barrels are stored in these early caverns. Presumably, a responsible manager would not draw these down unless it was an extreme emergency.
There are a few other considerations that limit the amount of oil that can be withdrawn, all of which combine to my estimate that there is ~105 million barrels left to tap in the U.S. SPR.
If my assumptions are accurate, then early September is the furthest the U.S. can go in tapping the SPR at current rates.
Of course, if all caution is thrown to the wind, more oil can be removed, but that would result in significant and even permanent damage to the U.S. strategic reserve facilities and caverns.
I cover all of this in detail in the video below.
For subscribers, I discuss the fact that I’m now convinced that the inbound energy crisis is intentional. If so, then the plan, such as it is, will be to keep oil prices artificially low which will boost demand far above supply which, in turn, will lead to a supply crunch at some point?
by hurricanerider