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The backup oil supply for the U.S. is running low. The Strategic Petroleum Reserve is down more than 50% since 2020, mostly due to conflicts in Ukraine and now Iran. Our colleagues at The Indicator - Cooper Katz McKim and Ricky Mulvey - looked into President Trump's new proposal for a refill using oil from Venezuela.
COOPER KATZ MCKIM, BYLINE: If you drive in the U.S., the Strategic Petroleum Reserve is saving you money. Back in 2022, the global drawdown saved you roughly 17 to 42 cents per gallon. But if another disruption hit tomorrow, that deal may not last much longer because the reserve is at its lowest point since 1982 and falling fast.
RICKY MULVEY, BYLINE: Yeah. And the Trump administration has had their eye on solutions for a while, but it is not an easy fix. Joseph Majkut is an energy security expert with the Center for Strategic and International Studies. He says we're not exactly in a position to just buy more oil to refill this thing.
JOSEPH MAJKUT: Under normal mechanisms, it requires Congress to say we're willing to buy oil and stick it in the ground. And at a time of significant fiscal deficit, that can be a challenging problem.
MCKIM: Previous administrations have come up with strategies to refill the reserve. For example, during the Clinton and Bush administrations, they did it through a royalty-in-kind program. But most recently, the headline solution is Venezuelan oil. A White House press release says a private company granted the U.S. 20% control of current and future fields that it operates in Venezuela.
MULVEY: And the important thing to note - Venezuela has a straight-up different kind of oil than the U.S. has in the SPR. So it'd have to be through some trading mechanism where the oil is sold, and another is purchased. Joseph, the energy security expert - he's bullish on the Venezuela deal.
MAJKUT: The key thing that it adds is a source of oil which won't cause large market disruptions and doesn't require Congress to agree to spend a lot of money to fill the SPR.
MULVEY: Here are the challenges, though. It is infamously difficult to get oil out of the ground in Venezuela. It would require an enormous amount of investment in infrastructure after years of under investment and corruption. One expert in Latin American energy put that figure at $100 billion over the next decade to get production levels to where they were 20 years ago. And it's not clear who would be footing that bill - whether it's oil companies, the U.S. government or somebody else.
MCKIM: Arnab Datta is a managing director at Employ America, focusing on energy markets. He says this Venezuela thing - it's just kind of a harebrained scheme.
ARNAB DATTA: I'm not really sure why we should be supporting Venezuelan production when we've got production here at home and amongst our allies that can fit this bill.
MULVEY: Instead of investing $100 billion of money in another country's oil - coordinating between agencies, sifting through the political chaos of Venezuela - Arnab says one could just put that money towards the Strategic Petroleum Reserve.
MCKIM: Plus, Arnab thinks the Trump administration's current strategy - it's working just fine. The Department of Energy is basically loaning out barrels to oil companies. Then they promise to return the oil sometime later at up to a 24% premium.
DATTA: I think that this is, like, a well-executed way of delivering to the market, but also sending a signal to the market that there's going to be demand for U.S. barrels.
MULVEY: Either way, oil supplies continue to get lower globally. Americans, who knows how much longer the Strategic Petroleum Reserve can shield us from even higher costs. Ricky Mulvey.
MCKIM: Cooper Katz McKim, NPR News.
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