US oil reserves drop towards Reagan-era lows, 'significant impact at the pump' coming, experts warn
The U.S. Strategic Petroleum Reserve (SPR) is dropping toward Biden-era lows toward levels not seen since the Reagan administration.
According to the latest data from the U.S. Energy Information Administration’s petroleum status report for the week ending June 5, the SPR fell to 349.2 million barrels, with nearly 9 million barrels per week being tapped.
The last time reserves approached this level was under the Biden administration in July 2023, when there were 346.7 million barrels in the SPR. If the reserve continues to decline, U.S. emergency crude oil inventories could hit a multi-decade floor not seen since August 1983.
Energy market experts are warning against the depletion as the Trump administration draws heavily on domestic reserves to counter the effective closure of the Strait of Hormuz during the war in Iran.
"This should be very concerning to every American consumer," American Petroleum Institute President and CEO Mike Sommers said in an interview on CNN. "Because as those inventories go down and production isn't increased, you're going to start seeing a significant impact at the pump."
"That's going to happen over time," Sommers cautioned, "but again, it's because of American production that we haven't seen those same price surges that you've seen in other parts of the world."
"It’s a pretty monumental number to hear multi-decade lows reached," GasBuddy head of analysis Patrick De Haan told Fortune. "The longer this goes on, the fewer tools the administration has in dealing with it and the more risk there is to a slingshot for costs."
Under Biden-era leadership, the SPR declined by 243 million barrels to address pandemic-era supply chain disruptions and the Russian invasion of Ukraine, according to a Fortune report. Over the last several months, the Trump administration has authorized an overall release of 172 million barrels as a result of the active conflict with Iran.
Energy prices rose 3.9% in May amid disruptions to Middle Eastern oil supplies, with prices up 23.5% in the last year. The Bureau of Labor Statistics noted that the energy index accounted for more than 60% of the overall consumer price index (CPI) increase in May. Gasoline prices increased 7% on a monthly basis in May and are up 40.5% compared with a year ago.
"We're raising alarm bells right now. We're at about 350 million barrels left in the Strategic Petroleum Reserve. You have to have about 20% of that left for it to be operational, for our system to operate, so we're getting to levels where we're starting to be concerned," Sommers said.
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"The only thing that we can do in the short term to fix this problem is to get the Strait [of Hormuz] open as quickly as possible," Sommers said.
Under Secretary of Energy Kyle Haustveit told FOX Business’ Edward Lawrence on Wednesday: "We're borrowing the barrels for a near-term supply challenge, but in return, the folks that receive those barrels are bringing more barrels back. On average, we're seeing over 25% premium."
FOX Business' Eric Revell contributed to this report.
