From Legal Insurrection
Reports indicate that supplies are exceeding demand, which is a good sign for those of us who appreciate inexpensive and efficient fuel sources.
Posted by Leslie Eastman
It has been about six months since we last wrote about the Strategic Petroleum Reserve (SPR).
When President Donald Trump issued an executive order declaring a “national energy emergency,”’ he directed the Department of Energy (DOE) to prioritize refilling the SPR to its full capacity, which is approximately 714 million barrels.
At the time, the reserve held around 394 million barrels-about 55% of capacity-after historic drawdowns during the Biden administration. As a reminder, in April 2024, the Biden administration refused to purchase oil to refill its reserves.
Initially, U.S. Energy Secretary Chris Wright estimated it would take $20 billion and years to accomplish Trump’s goal of refilling the reserve to its maximum capacity.
Progress is beginning to be made in the wake of falling crude oil prices. Plans are being made to purchase 1 million barrels for the SPR.
The Energy Department announced Tuesday that it plans to buy oil for delivery in December and January, using a portion of the $171 million from President Donald Trump’s signature tax and spending law allotted for crude purchases.
“While this process won’t be complete overnight, these actions are an important step in strengthening our energy security and reversing the costly and irresponsible energy policies of the last administration,” Energy Secretary Chris Wright said in a statement.
West Texas Intermediate, the U.S. benchmark, is down about 30% since its peak in mid-January. It traded at about $58 a barrel on Tuesday, near the lowest since 2021.
That makes it an ideal time to refill the reserve, which at 408 million bbls is only about 60% full. But the Energy Department only has $171 million to buy crude — or enough for roughly 3 million bbls, based on today’s price.
Reports indicate that supplies are exceeding demand, which is a good sign for those of us who appreciate inexpensive and efficient fuel sources.
The amount of crude on tankers at sea has risen to a record high, signaling that a long-anticipated surplus may have started to materialize, while time spreads are starting to signal ample supply. The International Energy Agency expects world oil inventories to exceed demand by almost 4 million barrels a day next year as OPEC+ and some countries outside the alliance ramp up output, likely in a bid to recapture market share.
“We’ve got supply growth running three times faster than demand growth,” Bob McNally, founder and president of Rapidan Energy Group, said in an interview on Bloomberg Television. “Near-term we have a glut.”
The DOE just issued a report that highlights measurable progress in cavern refurbishment and system testing related to the SPR infrastructure, with 95% of its essential drawdown capacity restored by 2025. However, the agency also warns that aging salt caverns remain a medium-term risk requiring sustained congressional funding through 2028 for complete modernization.
The Trump administration’s handling of the SPR will be a strong selling point in the next presidential election cycle for anyone on the team who cares to throw their hat in the ring.
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