Why is the Strategic Petroleum Reserve Unable to Operate During Power Outages?

Michael Giberson

According to the US Department of Energy, “The Strategic Petroleum Reserve exists, first and foremost, as an emergency response tool the President can use should the United States be confronted with an economically-threatening disruption in oil supplies.”

In response to disruptions caused by Hurricane Gustav, the DOE has indicated a willingness to release reserves from the SPR. Unfortunately, due to a continuing power outage – also caused by Hurricane Gustav – the DOE is unable to pump oil from storage.

Disruptions serious enough to be “economically threatening,” whatever that means, are very rare events – the U.S. has only released oil in such circumstances a few times in the SPR’s 35-year history. Power outages are also rare events. If the two kinds of events were uncorrelated, then simultaneous power outages and economically-threatening disruptions in oil supplies would unlikely in the extreme. But the two kinds of events are not uncorrelated, obviously.

As Platts reports, the SPR does have backup generators on site, but the generators produce insufficient power to permit pumping from storage. Any release of oil from the SPR will have to wait for power to be restored to the area.

I admit to never having been much of a fan of the SPR, having never been convinced that there was a coherent economic and political plan for management of the reserve during either the accumulation or release phases of operation. But if we are going to have an emergency stockpile, it really ought to be able to function during an emergency.