The United States’ Strategic Petroleum Reserve has been depleted over the course of the Iran war, raising concerns about sustainability and potential damage to the salt caverns storing it.
| PULSE POINTS |
❓ WHAT HAPPENED: The United States’ Strategic Petroleum Reserve (SPR) has reached its lowest level in 40 years. 📰 DETAIL: On Monday, it was revealed that the U.S. SPR had dropped below 300 million barrels due to ongoing withdrawals for the Iran war, which began in late February. The depletion of the country’s SPR has contributed to record-high gas prices for mid-August, with the national average reaching $4.07 per gallon, according to AAA Gas Prices. The SPR was initially designed to handle five full drawdowns over its lifespan, but it has undergone numerous cycles over the past 40 years. The crude oil is held in 60 salt caverns spanning four sites in Texas and Louisiana. The oil is extracted by pumping water into the caverns to force the oil upwards into intake pipes. However, the process increases the risk of a cave-in as water dissolves and thins the salt walls of the caverns, especially when the water-to-oil ratio surpasses a certain threshold. Some experts have suggested that ongoing withdrawals could result in permanent damage. “The practical operational floor for the crude inventory is between 250 million and 300 million barrels,” Siddharth Misra, Professor of Petroleum Engineering at Texas A&M University, told CNBC. 💬 KEY QUOTE: “The caverns are always full. All that changes is the ratio of oil and water that is filling them,” insisted Ben Dietderich, spokesman for the Department of Energy. 🎯 IMPACT: The depletion of the U.S. SPR has raised concerns about the reserve’s ability to function effectively in future emergencies. Reports from earlier in the year suggest that countries are hoarding oil reserves in response to the rising costs created by the Iran war. “If the Iran war does not end in the coming weeks and we don’t have the reopening of the Hormuz strait, I’m afraid a world recession could be on the table,” said Apostolos Tzitzikosta, Transport Commissioner for the European Union (EU), back in May. |
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