The Strategic Petroleum Reserve Should Be Treated Strategically, Not as a Piggy Bank to Pay for Pork

The House of Representatives is considering the trillion-dollar infrastructure bill passed by the Senate earlier this year. NTUF has analyzed some of the budgetary gimmicks used to mask the true cost of the bill, including an overview of the provisions, and an in-depth analysis of the use of "customs user fees" nine and ten years into the future to "pay for" unrelated new spending that will mainly fall over the next few years.

Another egregious gimmick in the package is the proposal to draw down the Strategic Petroleum Reserve (SPR) and count the receipts as an offset against spending. The SPR should not be viewed as a revenue-raiser, however — it was created as an emergency stockpile in the event of a shock to the oil market. This would be the 8th time a drawdown was used purely as an offset, rather than in response to an energy emergency.

Since taxpayer funds were spent in the past to fill up the SPR and maintain it, receipts from a drawdown ought to be directly used to finance the government's sizable debt burden rather than go to finance more deficit spending.

Some have argued that the SPR is currently too large given the expansion of U.S. oil production, but this policy change should be considered strategically and not implemented on an ad hoc basis whenever lawmakers are scrounging for additional "offsets" for new spending.

Origin of the SPR

The SPR was established in 1975 to prevent future economic disruption caused after the Organization of Petroleum Exporting Countries (OPEC) initiated an embargo of oil sales to the U.S. in 1973 and 1974. The Energy Policy and Conservation Act of 1975 called for a one-billion-barrel reserve. Through the SPR the U.S. fulfilled its obligations as a member of the International Energy Agency (established in 1974) to maintain a 90-day stockpile of petroleum. 

The original structures used for the reserve had a capacity of 750 million barrels. The maximum capacity was later reduced after one of the facilities was shut down due to structural damage. The SPR reached its maximum amount in 2009 at just under 727 million barrels.

Financing the SPR

The SPR is filled via direct purchases, royalty-in-kind transfers (which allows companies to pay royalties owed to the federal government in oil or natural gas rather than cash), and other types of exchanges. Funding is also required for managing and maintaining the reserves. This year's budget estimates outlays of $246 million in 2021 for staffing and facilities costs. There is also a separate account for managing petroleum acquisitions, transportation, and sales, with estimated outlays of $24 million in 2021. Net of drawdowns, purchases, and facilities, the SPR has cost taxpayers $19 billion (in unadjusted dollars) from 1975 through 2021.


There have been drawdowns in response to market and international concerns, such as the 30 million barrel drawdown in 2011 after the turmoil in Libya cut off its exports. In 2017, 5 million barrels from the SPR were used to offset a shortage after hurricane Harvey. The full amount was later replenished to the SPR.

Starting with the Bipartisan Budget Act (BBA) of 2015, Congress began drawing down the Reserve as a way to offset spending hikes. The BBA of 2018 increased Budget Control Act (BCA) spending caps by $55 billion in 2016 and $35 billion in 2017, and required the SPR to sell off 58 million barrels of oil from 2018 to 2025. Receipts of sales from the SPR are recorded in the budget as offsetting receipts against direct spending, so the Congressional Budget Office estimated that this would generate $5 billion in savings that could be applied to busting the spending caps.

This was followed with additional drawdowns:

  • The Fixing America's Surface Transportation (FAST) Act of 2015: This Act provided $305 billion in transportation funding from 2016 through 2020 and mandated an SPR sale of 66 million barrels from 2023 through 2025 for $6 billion in offsetting receipts.

  • 21st Century Cures Act of 2016: This Act increased outlays by over $106 billion, primarily for the National Institutes of Health and the Food and Drug Administration, and mandated an SPR sale of 35 million barrels from 2017 through 2019 for $5.4 billion in offsetting receipts.

  • Tax Cuts and Jobs Act: The $1.5 trillion tax reform law included an SPR sale of 7 million barrels in 2026 and 2027 for $315 million in offsetting receipts.

  • Bipartisan Budget Act of 2018: This Act increased BCA spending caps by $143 billion in 2018 and $153 billion in 2019 and included an SPR sale of 100 million barrels from 2022 through 2027 for $6.4 billion in offsetting receipts.

  • Consolidated Appropriations Act of 2018: This included an SPR sale of 10 million barrels over 2020 and 2021 for $510 million in offsetting receipts.

  • America’s Water Infrastructure Act of 2018: Authorized $7.5 billion to the Army Corps of Engineers and included an SPR sale of 5 million barrels in 2028 for $340 million in offsetting receipts.

The Congressional Research Service summed it up: "The sales revenue accrued through SPR sales was allocated to a variety of uses; however, energy policy, or security, was not among them.”


Congress should consider policy changes to the SPR strategically rather than selling off the stockpile when offsets are needed. Lawmakers could also take a look at options to allow the leasing of excess SPR capacity to commercial clients or other governments. This would help offset the costs of maintaining the SPR. 

Regardless, given the billions of taxpayer funds used to finance this program since its inception, any savings should go directly to financing the federal debt. Instead of using the SPR as just another gimmick to finance endless spending increases, Congress should leave it to its narrow role of protecting the economy and country from fuel shortages.