- [Narrator] This patch of land,
about 70 miles outside of Houston, Texas
doesn't look like much but if you zoom in,
these little rectangles sit above a powerful economic
and political tool.
Just underground is a network of caverns full of oil,
part of the US's Strategic Petroleum Reserve or SPR.
Since March, President Biden
has been tapping into it in a big way.
- The Department of Energy released
another 15 million barrels
from the Strategy Petroleum Reserve.
- [Narrator] All together, the administration
will have released 180 million barrels in 2022,
the largest drawdown from the SPR ever.
Pumping from the reserve, the administration says
has helped lower Americans' energy bills,
and stabilize markets.
But some oil industry experts disagree.
- When we talk about the forces
that are hitting the oil market,
this does very little to change the tide.
- [Narrator] Here's how the Strategic Petroleum Reserve
can be used to try to bring down prices,
and why some are skeptical that Biden's moves are working.
(pensive music)
Along the Texas and Louisiana coasts,
the caverns are located in Bryan Mound,
Big Hill, West Hackberry, and Bayou Choctaw.
As of October 28th,
the reserve held about 399 million barrels of oil.
- We're talking about sort
of four storage sites, 60 caverns.
The largest one I think is big enough
that you could fit the Willis Tower
that you have in Chicago in it.
And the tower four for reference is 1,451 feet.
That's substantial.
You could put a lot of oil in there.
- [Narrator] So why does the US government keep
this much oil on hand?
It goes back to the Energy Policy
and Conservation Act of 1975.
During the 1973 to '74 OPEC oil embargo,
prices for oil skyrocketed.
- As a result, we face the possibility
of temporary fuel shortages
and some increases in fuel prices in America.
- [Narrator] This led to gasoline shortages
across the country.
- No gas.
- There's no gas today? - No.
- [Narrator] When President Ford signed the act into law,
it was an attempt to establish a buffer
against future supply shocks of this kind.
It specified that presidents can tap into the reserves
when there's an energy supply interruption
or due to obligations of the United States
under the international energy program.
Over the years, that's meant a few things.
- Historically, the US has drawn to the SPR
for emergency and non-emergency releases.
What's an emergency release?
It's a hurricane that disrupts all production.
And what's a non-emergency drawdown?
It's a sale mandated by Congress as part
of policy making.
- [Narrator] Using that authority,
Biden tapped into the reserves starting in the spring
and through this fall.
- We 're gonna continue to stabilize markets
and decrease the prices at a time
when the actions of other countries
have caused such volatility.
- The market for oil has been very tight.
And the US has had to balance the fight against inflation,
and gasoline prices has been a main driver of that
with targeting Russia and punishing it
for its invasion of Ukraine.
- [Narrator] Releases from the SPR can help calm oil traders
by injecting more crude supplies into global markets.
Right now, oil supplies are tight, causing high prices.
By taking oil from the reserves
and selling it to traders and refiners,
Biden is increasing supply
in an effort to lower prices at the pump
because gasoline prices
are largely determined by oil prices.
This strategy has worked in the past.
Take when the government tapped into the reserve
after Hurricane Katrina as an example.
The US sold 11 million barrels
to keep production study for the rest of the country.
After the release, prices stabilized.
And something similar happened earlier this year due
to Biden's March announcement
when he said he'd release one million barrels a day.
- Treasury Department estimates
that the releases that we've seen this year,
lower the price of gasoline
between 13 and 31 cents per gallon.
So that's a pretty broad range.
- [Narrator] But industry critics say that the oil releases
have artificially lowered prices in the short term,
dissuading investment in new oil production.
US officials said they had intended the reserve releases
to be a stop gap until domestic production ramped up.
- There's only be a slight increase in production
so far this year, about 6% since January.
And that's largely because the large producers in the US
have been conservative about spending.
- [Narrator] Biden has tried to deal with lower production
by announcing that he would refill the reserve.
- That means all companies can invest
to ramp up production now
with confidence they'll be able to sell their oil
to us at that price in the future, $70.
- [Narrator] But analysts have said
that shifting from releasing the reserves
to refilling them could remove large amounts of oil
from the global market,
which would continue to tighten supplies
and contribute to inflation.
They say that Biden should wait to refill the reserves
until there's a surplus of oil and lower prices.
The latest release from the reserve,
the 15 million barrels,
are said to be delivered in December.
- Biden has said that he would ask his team
at the Department of Energy
to, depending on the situation,
make further releases from the SPR.
So he has not ruled out additional releases.
- [Narrator] Until the SPR is refilled,
federal inventories are at a 38-year low
but Biden says there is still enough in case of emergency.
(dramatic music)