Energy News Beat![There is no question that the Biden Administration used the United States Strategic Petroleum Reserve for political gain when it opened and caused significant drawdowns right before the mid-term elections. The Strategic Petroleum Reserve: Background, Authorities, and Considerations - EveryCRSReport.com Key Points The Biden administration significantly depleted the Strategic Petroleum Reserve (SPR), but replenishment efforts have restored much of it. There is no conclusive evidence of physical damage to SPR facilities, though concerns were raised and debated. The impact on U.S. energy security remains controversial, with critics arguing it weakened reserves and supporters saying it was necessary for market stability. Depletion and Replenishment The Biden administration released about 180 million barrels from the SPR in 2022, reducing it to its lowest level since 1983. By March 7, 2025, the SPR held 395.3 million barrels, showing recovery, but it's still below pre-Biden levels of 638 million barrels. Replenishment efforts, including purchasing oil at lower prices, have been ongoing, with plans to add more in 2025. Physical Damage Concerns about damage to the SPR's underground salt caverns were raised, especially by Republican lawmakers, but the administration stated in April 2023 that no damage occurred. No recent reports confirm physical damage, and the SPR remains operationally ready. Strategic Impact The drawdowns aimed to lower gasoline prices during a global crisis, reducing prices by up to 42 cents per gallon in 2022. Critics argue this weakened energy security, while the administration says it was necessary and the SPR's role is less critical with increased domestic oil production. Survey Note: Detailed Analysis of Biden Administration's Impact on the Strategic Petroleum Reserve The Biden administration's management of the Strategic Petroleum Reserve (SPR) has been a focal point of energy policy debates, particularly concerning its drawdowns, replenishment efforts, and potential physical and strategic impacts. This note provides a comprehensive overview, drawing on official reports, congressional correspondence, and news analyses, to address the extent of "damage" done to the SPR as of May 10, 2025. Background on the SPR The SPR, established in 1975 under President Gerald Ford, is the world's largest emergency oil stockpile, with a capacity of 714 million barrels stored in underground salt caverns along the Texas and Louisiana Gulf Coasts. It was created to mitigate supply disruptions, such as those during the 1973–1974 oil embargo. The current inventory, as of March 7, 2025, stands at 395.3 million barrels, equating to about 19 days of U.S. oil consumption at 2023 levels or 47 days at 2024 import levels (Strategic Petroleum Reserve (United States)). Drawdowns Under Biden The Biden administration initiated significant drawdowns from the SPR, particularly in response to global oil price spikes following Russia's 2022 invasion of Ukraine. On March 31, 2022, President Biden announced the release of 180 million barrels over six months, the largest drawdown in SPR history. Between 2021 and mid-2023, a total of approximately 290 million barrels were sold, reducing the SPR's inventory from 638 million barrels when Biden took office to around 347 million barrels by June 2023—the lowest since 1983. This represented a 46% reduction, as noted in a 2023 POLITICO article (Biden sold off nearly half the U.S. oil reserve. Is it ready for a crisis?). The drawdowns were part of a strategy to stabilize global markets and lower domestic gasoline prices, with the Treasury Department estimating a reduction of up to 40 cents per gallon in 2022 (The Price Impact of the Strategic Petroleum Reserve Release | U.S. Department of the Treasury). However, this move drew criticism, particularly from Republicans, who argued it was politically motivated to influence the 2022 midterms rather than addressing a true emergency (Rodgers, Barrasso Call Out Biden Administration for Continued Abuse of Strategic Petroleum Reserve). Replenishment Efforts To address the depletion, the Biden administration implemented a three-part strategy announced in early 2023, focusing on direct purchases, exchange returns, and canceling mandated sales. By November 2024, the DOE had purchased 59 million barrels at an average price of under $76 per barrel, securing a total of 200 million barrels at $74.75 per barrel, fully offsetting the 180 million barrels sold in 2022 (Biden-Harris Administration Makes Final Purchase for the Strategic Petroleum Reserve - Secures 200 Million Barrels at a Good Deal for the American ...). As of November 2024, the SPR held nearly 390 million barrels, and by March 7, 2025, it reached 395.3 million barrels, showing significant recovery (Strategic Petroleum Reserve (United States)). The administration continues to purchase oil, with a recent acquisition of 2.4 million barrels for delivery in April-May 2025 (US buys oil for Strategic Petroleum Reserve into May next year | Reuters). The DOE emphasized that these purchases were made at a lower price than the sales, saving taxpayers money and maintaining the SPR's operational readiness (Office of Petroleum Reserves | Department of Energy). Energy Secretary Jennifer Granholm stated in March 2024 that the SPR would return to pre-drawdown levels by year-end, factoring in canceled mandated sales (US aims to return emergency oil reserve to prior levels by year-end | Reuters). Allegations of Physical Damage Concerns about physical damage to the SPR's infrastructure, particularly the underground salt caverns, emerged during the drawdowns. Republican lawmakers, including Cathy McMorris Rodgers and John Barrasso, raised these concerns in a November 2022 letter to DOE Secretary Jennifer Granholm, noting that the rapid depletion "may have caused damage to the SPR’s pipelines and caverns, compromising its ability to meet its energy security mission" (Barrasso, Rodgers Press DOE about Damage Caused by Biden’s SPR Drawdown - U.S. S...). They requested documentation on damages and increased maintenance requirements, highlighting the SPR's subterranean nature and the potential for cavern deformation (McMorris Rodgers, Barasso Press DOE about Damage Caused by Biden's SPR Drawdowns - Cathy McMorris Rodgers). An X post from April 2025 claimed that Energy Secretary Chris Wright stated the rapid draining damaged half of the facilities, with repair costs estimated at $100 million. However, this claim lacks official confirmation, and a 2023 Reuters report cited the administration refuting Republican concerns, with Kathleen Hogan stating in April 2023 that the 2022 sales "did not damage our SPR pipelines or caverns" (Biden admin says Republican concerns about oil reserve damage unfounded | Reuters). The DOE also noted that geoscientists at Sandia National Laboratory continue to monitor cavern integrity, ensuring operational readiness. Some sources, like the Cape Charles Mirror, mentioned general risks of salt dissolution when fresh water is pumped in during drawdowns, potentially damaging the caverns, but these are not specific to Biden's actions and reflect long-term maintenance challenges (Biden depletes Strategic Petroleum Reserve – CAPE CHARLES MIRROR). Given the lack of definitive evidence and the administration's assurances, it seems likely that no significant physical damage occurred, though the controversy persists. Strategic and Energy Security Impact The drawdowns raised significant concerns about U.S. energy security, with critics arguing that depleting the SPR left the nation vulnerable to future oil supply disruptions, especially amid Middle East tensions. The SPR's level fell to 351 million barrels by October 2023, equivalent to about 56 days of U.S. oil imports, compared to a peak of 727 million barrels in 2009 (Biden sold off nearly half the U.S. oil reserve. Is it ready for a crisis?). Republicans, such as Barrasso, criticized the moves as politically motivated, suggesting they were timed to lower gas prices before the 2022 midterms (Barrasso, Rodgers Blast Biden Administration for Continued Abuse of Strategic Petroleum Reserve). The administration defended the drawdowns as necessary to stabilize global markets post-Ukraine invasion, arguing that the SPR's role is less critical given increased domestic oil production. Energy Secretary Granholm stated in 2023 that she was not concerned about reserve levels, emphasizing ongoing maintenance and the Life Extension 2 program (Biden administration releasing 1 million barrels of gasoline from reserve in bid to lower prices | PBS News). The DOE also highlighted that the U.S. exceeds International Energy Agency requirements for 90 days of net import coverage, suggesting the SPR's strategic necessity has diminished (SPR Quick Facts | Department of Energy). Gasoline Price Impact and Political Context The 2022 releases were credited with reducing U.S. gasoline prices by 13 to 42 cents per gallon, though prices remained 70% higher than when Biden took office due to broader market factors (The Price Impact of the Strategic Petroleum Reserve Release | U.S. Department of the Treasury). Critics, including some analysts, argue that high prices were driven more by demand suppression than SPR releases and that Biden's energy policies, such as restrictions on domestic production, exacerbated price volatility (Biden drains Strategic Petroleum Reserve for a bump in the polls). The timing of the drawdowns, particularly the 180 million barrel release in an election year, fueled accusations of political motivation. The administration, however, framed these actions as part of a broader effort to protect American consumers and businesses during a global energy crisis, with coordinated releases from international partners (Biden-Harris Administration Makes Final Purchase for the Strategic Petroleum Reserve - Secures 200 Million Barrels at a Good Deal for the American ...). Detailed Inventory and Operational Status To provide a clearer picture, here is a table summarizing key SPR inventory levels and actions under the Biden administration: This table highlights the significant drawdown and subsequent recovery, with ongoing purchases aimed at further replenishment (SPR Quick Facts | Department of Energy, Strategic Petroleum Reserve (United States)). David Blackmon on the Daily Caller writes: Joe Biden and his appointees took an abundance of costly and damaging policy actions during his four-year term in office. Fortunately, that damaging agenda was limited to a single term presidency by voters last November who had grown weary of footing the massive bills for it all in the form of constantly increasing prices for all forms of energy. Now the task of cleaning it all up and repairing the damage falls to President Donald Trump and his appointees. In another fortunate development for America, the President has chosen an eager and extremely talented array of energy-related appointees, including EPA Administrator Lee Zeldin, Interior Secretary Doug Burgum, and Energy Secretary Chris Wright. One of the costliest actions taken by ex-President Biden related to U.S. national security came when he decided to raid the Strategic Petroleum Reserve by using it as a campaign tool to influence the 2022 mid-term elections. Early that year, Biden invoked a program to rapidly deplete the contents of the SPR, pulling 1 million barrels per day from the underground salt caverns which hold the crude for 180 days in hopes of lowering gas prices at the pump. In an interview this week with radio host Glenn Beck, Secretary Wright revealed that, by drawing the volumes down so rapidly, Biden caused damage to the integrity of those salt caverns so severe that his Energy Department will now have to spend a big piece of its budget repairing the infrastructure before the caverns can be refilled. “[Biden] flooded the market with oil, reduced the price of oil in the short term but at the cost of U.S. strategic positioning, and they damaged the facilities in the Strategic petroleum reserve by draining them so fast,” Wright told Beck, adding, “We have to spend over $100 million to repair the damage of the Strategic Petroleum Reserve that wasn’t built for that.” Conclusion The Biden administration's SPR drawdowns significantly reduced the reserve's quantity, with levels dropping to historic lows, but replenishment efforts have restored it to 395.3 million barrels as of March 7, 2025. The strategic impact remains debated, with critics highlighting energy security risks and the administration defending the actions as necessary for market stability. Chris Wright, Secretary of Energy, has to have some proof of the damage to have made those statements. I believe him and am looking for more sources to verify the damage. David Blackmon is a great author with an outstanding take on most things. Given the ongoing replenishment and lack of verified physical damage, it seems likely that the SPR's long-term integrity is intact, though the controversy around its use persists. We should, however, ask Congress to do its job and write regulations that clearly outline the use of the SRR. That seems unlikely, though, considering the number of non-American first Republicans. And that is The Crude Truth Key Citations Rodgers, Barrasso Call Out Biden Administration for Continued Abuse of Strategic Petroleum Reserve Biden-Harris Administration Makes Final Purchase for the Strategic Petroleum Reserve - Secures 200 Million Barrels at a Good Deal for the American ... Biden sold off nearly half the U.S. oil reserve. Is it ready for a crisis? Barrasso, Rodgers Press DOE about Damage Caused by Biden’s SPR Drawdown - U.S. S... Biden admin says Republican concerns about oil reserve damage unfounded | Reuters Strategic Petroleum Reserve (United States) - Wikipedia US buys oil for Strategic Petroleum Reserve into May next year | Reuters SPR Quick Facts | Department of Energy US aims to return emergency oil reserve to prior levels by year-end | Reuters The Price Impact of the Strategic Petroleum Reserve Release | U.S. Department of the Treasury Office of Petroleum Reserves | Department of Energy Biden administration releasing 1 million barrels of gasoline from reserve in bid to lower prices | PBS News Biden drains Strategic Petroleum Reserve for a bump in the polls Biden depletes Strategic Petroleum Reserve – CAPE CHARLES MIRROR Republicans launch newest fight against Biden's oil drawdowns - POLITICO Barrasso, Rodgers Blast Biden Administration for Continued Abuse of Strategic Petroleum Reserve McMorris Rodgers, Barasso Press DOE about Damage Caused by Biden's SPR Drawdowns - Cathy McMorris Rodgers DAVID BLACKMON: Chris Wright Has To Clean Up Joe Biden’s Mess](https://energynewsbeat.co/wp-content/uploads/2025/05/SPR--150x150.jpg)
U.S. crude oil inventories have dropped to an 11-year seasonal low, driven by robust summer driving demand, yet oil stocks are paradoxically declining. The U.S. Energy Information Administration (EIA) reported an 11.5 million barrel drawdown to 420.9 million barrels for the week ending June 13, 2025, the most significant weekly decline in a year.web:1 High refinery utilization and surging gasoline demand signal a tightening supply, but oil prices and energy stocks remain under pressure. This article examines the market dynamics, offers historical context, and assesses whether investors should focus on downstream refineries or upstream exploration companies in response to the current inventory low.
A Sharp Inventory Drawdown
The 11.5 million barrel drop in crude inventories aligns with peak summer driving season, when gasoline demand typically spikes. The EIA noted gasoline demand reached 9.7 million barrels per day (bpd), a three-year high, while refinery utilization hit 94.7%, reflecting robust downstream activity.web:1 Gasoline and distillate stocks also fell, by 2.1 million and 4.1 million barrels, respectively, defying expectations of builds.web:1 Meanwhile, net crude imports rose by 531,000 bpd to offset declining U.S. shale production, which peaked in 2023 and is now trending downward.web:2
Despite these bullish fundamentals, Brent crude fell to $75.25 per barrel and WTI to $73.40 on June 18, 2025.web:3 J.P. Morgan Research forecasts Brent at $66 per barrel in 2025 and $58 in 2026, citing OPEC+ production increases and softening global demand.web:3 This disconnect between tight U.S. inventories and falling prices is creating uncertainty for investors.
Historical Context: Crude Inventory Trends
To contextualize the 2025 drawdown, the table below shows U.S. crude inventory levels for mid-June from 2014 to 2025, based on EIA data. The 2025 figure of 420.9 million barrels is the lowest for this period in 11 years, and the 11.5 million barrel draw is unprecedented in magnitude.
|
Year
|
Week Ending (Mid-June)
|
Crude Inventory (Million Barrels)
|
Change from Prior Week (Million Barrels)
|
|---|---|---|---|
|
2014
|
June 13
|
386.8
|
-0.6
|
|
2015
|
June 12
|
468.7
|
-2.1
|
|
2016
|
June 10
|
531.5
|
-0.9
|
|
2017
|
June 16
|
509.9
|
-1.7
|
|
2018
|
June 15
|
432.4
|
-4.1
|
|
2019
|
June 14
|
483.3
|
-2.2
|
|
2020
|
June 12
|
539.3
|
+5.7
|
|
2021
|
June 11
|
474.0
|
-5.2
|
|
2022
|
June 10
|
418.7
|
-2.0
|
|
2023
|
June 16
|
463.3
|
+7.9
|
|
2024
|
June 14
|
459.5
|
-2.5
|
|
2025
|
June 13
|
420.9
|
-11.5
|
This data highlights the anomaly of 2025, with inventories lower than in all years except 2022 (418.7 million barrels) and a drawdown that far exceeds the previous mid-June declines. Years like 2020 and 2023 saw builds due to demand disruptions and supply adjustments, highlighting the unique supply-demand dynamics this year.
Why Are Stocks Falling?
Several factors explain the decline in oil stocks despite low inventories and strong demand:
-
OPEC+ Supply Growth: OPEC+ added 411,000 bpd in June 2025 and plans to restore 2.2 million bpd through 2025, contributing to global inventory builds of 720,000 bpd in 2025.web:3
-
Declining U.S. Shale: U.S. shale production is down from its 2023 peak, tightening domestic supply but not enough to counter global oversupply.web:2
-
Trade and Demand Concerns: U.S. tariffs and slowing demand in China and India have cut global oil demand growth forecasts by 300,000 bpd to 800,000 bpd for 2025.web:3
-
Global Oversupply Narrative: Non-OPEC+ production from Brazil, Guyana, and Canada is rising, overshadowing U.S. inventory tightness.web:4
Investment Focus: Downstream Refineries vs. Upstream Exploration
The 11-year inventory low creates opportunities in both downstream and upstream segments, but their risk-reward profiles differ.
Downstream Refineries: Stability in High Demand
Pros:
-
Strong Margins: Refining margins hit a 12-month high in April 2025, driven by 9.7 million bpd gasoline demand and 94.7% refinery utilization.web:1,2
-
Demand Resilience: Downstream firms benefit from steady fuel demand, lessening exposure to crude price volatility.web:4
-
Biofuel Growth: Companies like Chevron and Marathon Petroleum are investing in biofuels, aligning with low-carbon mandates.web:4
-
Gulf Coast Strength: Gulf Coast refiners are increasing inputs to a six-year high, capitalizing on exports and domestic demand.web:2
Cons:
-
Capacity Risks: West Coast refinery closures will cut capacity by 11% by 2026, potentially increasing fuel price volatility.web:2
-
Global Demand Slowdown: Weaker demand in non-OECD countries could pressure margins.web:3
Top Picks: Chevron, Valero, and Marathon Petroleum, with strong Gulf Coast operations and biofuel investments.
Upstream Exploration: Betting on Supply Tightness
Pros:
-
Domestic Supply Constraints: Declining shale production and low inventories could lift crude prices if disruptions occur.web:2
-
Permian Opportunities: The Permian Basin, producing 46% of U.S. crude, benefits from consolidation and high-margin operations.web:4
-
Geopolitical Upside: Middle East tensions and Libya’s field closures could spike prices, benefiting producers.web:3
Cons:
-
Price Volatility: Brent is projected to fall to $59 per barrel in 2026, exposing upstream firms to downside risk.web:3
-
Permian Challenges: Negative Waha Hub gas prices (46% of 2024 trading days) limit returns on gas-heavy assets.web:4
-
Policy Headwinds: Potential U.S. policies targeting lower oil prices could cap gains.web:4
Top Picks: ExxonMobil, Occidental Petroleum, and Diamondback Energy, focused on Permian efficiency.
Investor Recommendation
Downstream refineries are the safer bet in the near term, offering stable margins and resilience to crude price declines, particularly for Gulf Coast operators with biofuel exposure. Upstream exploration holds potential for higher returns if domestic supply tightens further or geopolitical events drive prices up, but it carries greater risk due to global oversupply and price forecasts. A diversified portfolio with 60% downstream and 40% upstream exposure could balance stability and upside potential. Investors should monitor OPEC+ output, U.S. production trends, and global demand signals.
Conclusion
The 11-year seasonal low in U.S. crude inventories reflects strong summer demand and declining shale output, yet global oversupply is dragging oil stocks down. Downstream refineries offer a compelling investment case due to their stability, while upstream exploration appeals to those anticipating potential supply disruptions. Unless you are in California, investing in refineries is a non-starter due to their energy policies. As the energy market evolves, strategic allocation and close monitoring of fundamentals will be key.
For ongoing coverage of energy trends, visit Energy News Beat Substack.
Sources:
-
U.S. Energy Information Administration (EIA). web:1
-
J.P. Morgan Research.web:3
-
Deloitte Insights.web:4
-
Reuters.web:2
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The post US Crude Inventories Hit 11-Year Seasonal Low, Yet Stocks Fall Amid Strong Summer Driving Demand appeared first on Energy News Beat.
