The United States Department of Energy Office of Fossil Energy announced last Friday that contracts have been awarded for the sale of crude oil from the Strategic Petroleum Reserve (SPR). The sale is for 10.1 million barrels of fuel to be sold during the fiscal year 2021. The Strategic Petroleum Reserve was established in the 1970s as a response to the Arab Oil Embargo that caused a fuel crisis in the United States. It was recently determined the SPR held 637.8 million barrels of crude oil, which makes it the world’s largest supply of emergency crude oil.
The seven entities awarded these contracts include Marathon Petroleum Supply and Trading LLC, Glencore LTD., Motiva Enterprises LLC, Phillips 66 Company, Shell Trading Company, Valero Marketing and Supply Company, and the Government of Australia. It has been determined that the barrels will come from three sites. These sites are Bryan Mount, Big Hill, and West Hackberry. Bryan Mound located near Freeport, Texas will sell 4.1 million barrels. West Hackberry will sell 3.3 million barrels from their site located in Louisiana. Lastly, the remaining 2.7 million barrels will come from Big Hill situated near Winnie, Texas.
This recent sell of reserves from the Strategic Petroleum Reserve comes a year after over 77 million barrels of crude oil was sold when oil prices collapsed at the start of the global pandemic. The SPR has an extensive history of protecting the American economy in times of oil shortages, including after hurricanes caused destruction along the Gulf of Mexico and during a geopolitical events.