The Strategic Petroleum Reserve hasn't been this low since Reagan was filling it in 1982. Critics wonder: How low is too low?
Withdrawals from the US government’s Strategic Petroleum Reserve (SPR) continued apace last week, with the energy backstop dropping by 5.3 million barrels of crude oil to a new level of 293.4 million.
The previous week’s reading was 298.7 million in reserve.
New data released on Monday by the US Department of Energy showed withdrawals largely keeping pace during a fifth month of releases since the Trump administration announced the move in March to try to steady global energy markets.
The reserve has dropped by an average of 6.3 million barrels each week since early April.
The latest release comes as gas prices remain elevated, averaging $4.06 a gallon on Monday, according to the American Automobile Association, the highest that gas prices have ever been in mid-August.
A total of about 120 million barrels have been released from the SPR since early April — an almost 30% drop — with the Trump team saying up to 172 million barrels could be released in total.
Read more: What’s the Strategic Petroleum Reserve, and can it help lower gas prices?
The reserve surpassed Biden-era lows earlier this summer and reached its lowest level since the early 1980s. It has fallen further in the weeks since and is now at the lowest level since December 1982, when the reserve was first being filled up under President Reagan.
The reserve was first established in the 1970s in response to the 1973-1974 Arab oil embargo.
The further declines also come as the standoff with Iran has shown no signs of ebbing, with the US and Iran in disagreement about whether talks are even happening and the Strait of Hormuz under blockade.
The latest shipping data shows less than 100 crossings in the Strait of Hormuz for all of last week (and mostly through Iran’s preferred route) according to Kpler, in contrast to more than 120 crossings that took place on an average day before the war.
About one-fifth of the globe’s oil passed through that crucial waterway before the war.
Questions are emerging about what level of withdrawals the reserve — which stores crude oil in salt caverns deep underground — can withstand before structural damage to the caverns becomes a risk.
The Trump administration has said for weeks that hundreds of millions more barrels can be released without worry and that just 70 million barrels must remain in the reserve to safely manage the caverns.
But a top Biden energy official this past week suggested that the reserve could already be nearing its effective minimum.
Amos J. Hochstein was a special presidential coordinator for global infrastructure and energy. He told CNBC last week that lowering the reserve much further would compromise it to “the point of never resurrecting it.”