WASHINGTON (TNND) — America’s strategic petroleum reserves are being drained to historically low levels as the United States responds to the ongoing conflict with Iran and the closure of the Strait of Hormuz, raising concerns about how prepared the country would be if another emergency hits.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the Strategic Reserve is nearing a decades-low mark.
“The Strategic Reserve is probably just about a week or two away from reaching its lowest level since 1983,” De Haan said.
De Haan said the United States agreed early on in the war to release and export reserves along with other countries in an effort to keep oil prices down globally. The reserves currently sit around 357 million barrels, nearly 60 million barrels less than they were before the start of the war. That drawdown, he warned, could leave the U.S. with fewer options if another crisis emerges.
“And there’s just no telling what the next crisis could be beyond this, but the U.S. is going to have a significantly curtailed ability to insulate itself from any future supply shocks with a strategic reserve that is approaching the lowest level since it was filled up,” De Haan said.
The reserve levels are approaching the low point of Joe Biden’s presidency, when his administration tapped the reserves after Russia invaded Ukraine and gas prices surged. That decision became a political flashpoint for Republicans, including when President Trump announced his bid for another run at the White House in 2022.
“Gas prices have reached the highest levels in history and expect them to go much higher now that the strategic national reserves, which I filled up, have been virtually drained in order to keep gasoline prices lower just prior to the election,” Trump said in remarks dated Nov. 15, 2022.
Analysts believe tapping the reserves for the Iran war prevented oil prices from reaching $150 a barrel. But as supplies dwindle, Americans remain frustrated that gasoline prices are up, and analysts warn the reserves cannot be tapped indefinitely.
Energy Secretary Chris Wright, speaking Wednesday, said the administration believes relief is ahead.
“They are much lower here than elsewhere. We want them lower everywhere and we want them lower in the United States and those days are coming. We’re paying a price to solve a huge problem. We appreciate the American public’s commitment to this,” Wright said.
The latest agreement to draw down oil reserves was structured as an exchange, according to the Energy Department. It’s basically an oil loan expected to be paid back by companies with even more oil than what is being released, with the expectation the swap is completed at a later date in 2027.