Exactly 50 years ago, during the 1973 Arab-Israeli War, the Organization of Petroleum Exporting Countries (OPEC) and specifically Saudi Arabia, imposed an embargo against the United States (and all countries that supported Israel) in retaliation for the U.S. decision to aid the Israeli military, and to gain leverage in the post-war negotiations. As a result, from January of 1973 to March of 1974 the price of a barrel of oil increased from $2.75 to $11.10. This caused energy prices to skyrocket and subsequent fuel shortages across the globe. In order to insulate the country from future shocks, the United States created the Strategic Petroleum Reserve(SPR) in 1975.Tucked away in four underground salt caverns, along the Texas and Louisiana coastlines, these coffers are filled with stockpiles of crude oil to ensure energy independence, and maintain price stability for the US economy. In 1974, many of the countries that supported Israel also created the International Energy Agency (IEA) to help coordinate a global response to oil disruptions .
Last year,180 million barrels of SPR oil were released by the United States to counteract price shocks to energy and gas prices from Russia's invasion, and the embargo on it's oil. IEA member countries (excluding the U.S.) released an additional 60 million barrels of oil to assist in these efforts. Currently, the United States has approximately 350 million barrels of oil in its Strategic Petroleum Reserve out of a max storage capacity of 714 million barrels. This is the lowest that it has fallen since 1983. Efforts to replenish oil stocks domestically and globally are underway but will take years to get back to previous levels.
Recently, OPEC announced a plan to voluntarily cut production which has caused oil prices to increase. Many experts believe that the price per barrel could exceed $100 before the end of the year. With Russia and OPEC members motivated to keep prices high to either fund its war, or cover fiscal shortfalls, the U.S. and other IEA members are at a distinct disadvantage when it comes to the price they will have to pay to replenish those low reserves. With government spending elevated and U.S. motorists (potential voters) extremely sensitive to what they pay at the gas pump, this does not bode well long term for both petroleum reserve levels and our ability to protect ourselves from another oil crisis if this trend persists.
