The US is energy independent but the Strategic Petroleum Reserve is still important for energy security

The US still imports heavy-sour crude oil.

Author’s Note: My previous article on Substack, “Strategic Petroleum Reserve: DOE continues to show no intention of refilling it,” sparked some great questions and discussions. One question was: Since the U.S. is now the world’s largest crude oil producer and is energy independent, do we need the SPR? That is a great question, and I wanted to write a few thoughts on what energy independence means and why it is important.

The goal of energy independence and the political power that comes with it has been a vision that has shaped US federal policy for 50 years. President Nixon announced a campaign called Project Independence to wean America off foreign oil by 1980. It was never achieved partly because the Arab Oil Embargo hit in October 1973, a year before he resigned.

President Jimmy Carter’s plan to be less dependent on foreign oil focused on using less of it by turning down the thermostat and wearing a sweater, declaring that natural gas should be used for home heating, and encouraging the use of coal for power generation. Anyone that wonders why so many coal-fired power plants were built in the late 1970s and 1980s has Jimmy Carter to thank for his Power Plant and Industrial Fuel Use Act of 1978.

Every president, from Ronald Reagan to Obama, talked about energy independence. President Trump said his goal was energy dominance. On the long road to energy independence, the US became the world’s largest natural gas producer in 2009 and the world’s largest oil producer in 2019 due to the shale revolution that was in full force by 2005. George Mitchell, the father of the US shale revolution, not a US president or a federal policy, was responsible for the US becoming energy independent.

The US both imports and exports crude oil for several reasons. One is that some refineries in the Northeast and the West import crude oil simply because of insufficient pipeline capacity to get the crude oil they need, so foreign crude is brought in on oil tankers from other countries. Second, many US refineries, including most of the Gulf Coast refineries, were built in the 1970s to process heavy-sour crude oil because over 70% of the imported crude oil came from OPEC countries which produce heavy-sour crude oil.

Since most US crude oil production is light-sweet crude from shale, the US must import heavy-sour crude for these refineries. The Keystone XL pipeline was the long-term solution to this need for heavy-sour crude oil. It would have eliminated our need to import heavy-sour crude oil from unstable and hostile countries, but President Biden canceled it on the first day of his presidency. This led to the unbelievably ridiculous and dangerous decision to lift the sanctions on Venezuela so the US could buy heavy-sour crude oil from them. This series of monumental blunders deserves more discussion at a later time.

The long-sought-after goal of energy independence finally came in 2020, when the United States became a net exporter of crude oil and refined petroleum products, referred to as “petroleum,” for the first time since at least 1949. In 2022, total petroleum (crude oil plus petroleum products) exports were about 9.58 million barrels per day, and total petroleum imports were about 8.32 million barrels per day, making the United States an annual net total petroleum exporter for the third year. This is shown in the graph below when net imports of crude oil and petroleum products became negative in 2020.

So, back to the question: If the US is energy independent, is the SPR still important? The answer is yes because much of the US refining capacity still depends on heavy-sour crude oil, mostly imported.

ExxonMobil recently made great strides toward increasing refinery capacity to refine light-sweet crude oil when they built an expansion to their Beaumont, Texas refinery designed to refine 250,000 barrels per day of light-sweet West Texas crude oil. But the fact remains that the US needs more heavy-sour crude than we produce, so the SPR can provide some protection if the flow of foreign heavy-sour crude oil occurs. The SPR should be mostly filled with heavy-sour crude oil to keep US refineries running in case a geo-political event disrupts the importation of heavy-sour crude oil.

The future

It is critical to US and world security that the US remains the world’s largest producer of natural gas and crude oil and stays energy independent. US energy dominance helps maintain peace and security in the world. The main impediment to the US remaining energy independent is the current domestic energy policy that is totally focused on eliminating fossil fuels. The transition away from fossil fuels is failing (see my Substack article published on June 2, 2023, titled “Net Zero by 2050 is failing), but the continued attempts to force it are only increasing the need for hydrocarbons. The SPR is essential to overall US energy security and should be refilled as soon as possible.

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