While it took the Biden administration the better part of six months to drain the US oil supply down to a precarious 20-days of emergency reserves (a 40-year low), it will take decades to refill - if that happens at all, Bloomberg reports.
Stroll through the West Hackberry oil facility on the US Gulf Coast and there’s not much to see: some pipelines and other industrial equipment. But buried deep beneath the surface are storage caverns so massive they’re tall enough to house the Empire State Building with plenty of room to spare.
Thanks to the Biden administration, these reserve sites are sitting half empty.
The Strategic Petroleum Reserve (SPR) now sits at 346.8 million barrels - a level unseen since 1983 - out of a total authorized storage capacity of 714 million.
Perhaps even more noteworthy, the emergency reserves are equal to approximately just 20 days worth of supply - an all-time record low...
Replenishing the supply will be a nontrivial and lengthy process according to experts, who say that a lack of funding and ancient infrastructure will hinder the process, despite the Energy Department's vow to keep buying.
Now that energy costs are back down comes the task of refilling the reserve. That will be a complicated, expensive process. Oil prices are now much higher than when most of the inventory was originally bought — the average price paid for oil in the reserve was $29.70 per barrel, which compares with the current benchmark cost for US crude futures at about $75.
And there’s the balance between needing to buy and not purchasing too much at once, lest the oil market gets spooked and prices jump higher. -Bloomberg
"It would be a very slow process even if you had the money and the facilities were are all in good shape," said John Shages, who previously oversaw the oil cache for the Energy Department, adding "It could take decades."
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