With oil prices surpassing $100 a barrel and U.S. gas prices surging as a result of the war, the Strategic Petroleum Reserve (SPR) once again found itself in the spotlight as politicians began calling on the president to tap into the nation's oil reserves to increase supply and ease prices at the pump for inflation-weary consumers.
And on March 1, 2022, President Joe Biden obliged, announcing he would release 30 million barrels of crude oil from the SPR to counteract the surge in prices caused by Russia's invasion of Ukraine. On March 31, he went on to announce the additional tapping of 180 million barrels: 1 million per day for six months starting in May 2022.
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The same scenario is playing out today as the war in Iran disrupts oil shipments from the Middle East, resulting in a sharp spike in global oil and gasoline prices and a drop in the S&P 500. And just like in 2022, opposition politicians -- this time led by Senate Minority Leader Chuck Schumer -- have begun their calls for President Donald Trump to tap the SPR to provide relief from the high gas prices that are "already hitting families in their wallets," according to Schumer.
While the International Energy Agency announced Wednesday that its members, which include the U.S., would release a record 400 million barrels to address supply disruption, President Trump has seemed cool to the idea, and it's unclear how much the U.S. has committed to this effort. There's also the fact that the SPR was only partially replenished after the last drawdown, as both the Biden and the Trump administrations were waiting for better prices before restocking it. The SPR currently sits at about 415 million barrels (but has a capacity of 714 million barrels).
How would a potential SPR release actually affect oil prices?
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A drop in the barrel
Schumer described a release from the SPR as a tool "so many other presidents have used to lower prices at the pump," but besides Biden's 2022 release, it's actually only occurred three other times since the SPR was created in 1975: in 2011 during the Arab Spring uprisings, in 2005 after Hurricane Katrina, and in 1991 during Operation Desert Storm in Kuwait.
The thing is, even the 400 million barrel release from the IEA wouldn't last long. Global oil consumption is estimated at over 100 million barrels per day. As of 2023, U.S. oil consumption was estimated at 20.3 million barrels per day. Biden's 1 million barrels per day would have increased U.S. crude supply by about 5%, while reducing the SPR's stockpile by a total of 210 million barrels -- which, of course, would eventually have to be repurchased, presumably at lower prices.
That oil also can't be released all at once: it would gradually be moved onto the global market, likely in a similar manner to Biden's 1 million barrels per day.
Image source: Getty Images.
The U.S. Treasury Department released a report in July 2022 suggesting that Biden's releases lowered the price of gasoline by somewhere between $0.17 and $0.42 a gallon, which would have been between about 3% and 11%, considering the average U.S. gas price ranged from about $3.80 to $5.10 a gallon during that time. However, consumers may not have noticed the impact, since crude oil and U.S. gasoline prices rose throughout May and into June 2022 before beginning a steady decline.
The average U.S. gas price currently sits at $3.48 a gallon. A 3% to 11% decrease would lower it to between $3.10 and $3.38. That would certainly bring some relief to consumers, but probably not as much as they, or the politicians representing them, would hope.
