By David Middleton – Re-Blogged From WUWT
Trump says U.S. to buy oil to fill up the Strategic Petroleum Reserve
By Myra P. Saefong
President Donald Trump announced Friday that the U.S. will buy large quantities of oil to fill the country’s Strategic Petroleum Reserve. “We’re gonna fill it up. It’s a good time to fill it up,” Trump said at a press conference, during which he declared a national emergency to access additional aid to cope with the spread of COVID-19. As of March 6, the SPR held a total of 635 million barrels of crude oil. Its current storage capacity is 713.5 million barrels.
I don’t know how quickly DOE will fill up the SPR. With about 78.5 million barrels (bbl) of available capacity, they could absorb 250,000 bbl/d of excess production for about 10 months. Russia and Saudi Arabia (mostly the Saudis) reportedly will be increasing production by about 3-3.5 million bbl/d. Totally offsetting that would fill the SPR in less than 1 month. This already appears to have had a stabilizing effect on prices.
The SPR can be drawndown at a maximum rate of 4.4 million bbl/d. The US currently imports close to 1 million bbl/d from Russia and Saudi Arabia. The US could consider suspending imports from OPEC+ (~2 million bbl/d), replacing it with domestic production and SPR releases. This would have a more significant effect on prices, allowing us to “hit back” a bit.