By Timothy Gardner

WASHINGTON (Reuters] – President Biden is looking at tapping the U.S. Strategic Petroleum Reserve, which could help cool oil prices together with big buyers like China or Japan.

Analysts say such a move might not have long-term effects on lowering U.S. crude oil prices, which reached a 7-year-high above $85 per barrel in October.

Biden’s decision to let oil go could help it to defend itself against criticism before the midterm elections in 2022. This is because the administration has failed to do enough to curb rising prices. Biden could be able to claim that he moved in concert with large consumers such as China and Japan after Saudi Arabia, a member of the OPEC+ production network, refused to allow more oil to global markets.

These are some of the problems surrounding the use of the SPR.

WHY IS THE SPR CREATED?

After the 1975 Arab oil embargo caused gasoline prices to spike and threatened the U.S.’s economy, the United States established the SPR. The stockpile has been used by presidents to stabilize oil markets in times of war and hurricanes that hit the U.S. Gulf of Mexico.

WHAT TYPES OF OIL DO THE SPR USE?

The current reserve holds 606 millions barrels of oil in more than a dozen caverns located at four secure locations off the Texas and Louisiana coasts. It’s enough oil that the U.S. could consume for more than a full month.

A small amount of gasoline is also kept in the Northeast United States by the country.

WHAT OTHER COUNTRIES HAVING STRATEGIC RESERVES

The United States is the only country that must have oil reserves in an emergency. All 29 members of the International Energy Agency (including Australia, Germany and Japan) are also required to maintain oil reserves equal to 90 days’ net oil imports. Japan holds the second largest oil reserve after China and the United States.

China is an associate member in the IEA. It’s the second largest oil consumer and was the first to hold its oil reserve. India, an IEA Associate Member, is also a third-largest oil importer.

According to the IEA, OECD countries held over 1.5 billion barrels crude oil as of September.

IS IT PERMITTED FOR THOSE COUNTRIES TO USE OIL ONE TIME?

The U.S. presidents are able to coordinate a release of SPR with drawsdowns by reserves from other IEA member countries simultaneously. The U.S. could coordinate a potential release that includes India and China.

HOW DOES SPR OIL GO TO MARKET

The SPR is able to ship up to 4.4 million barrels daily due its proximity of major U.S. refineries or petrochemical centres. According to the Energy Department, it can take just 13 days for oil to reach the U.S. markets after a president has made a decision.

Under an oil sale, Energy Department typically holds an internet auction where energy companies can offer their services. Oil companies can swap crude oil for but must return the same amount plus interest.

Three times have the U.S. presidents authorized an emergency sale from SPR, including in 2011, during a conflict in Libya. The Gulf War, 1991, and the 2005 Hurricane Katrina were also times when sales took place.

More oil swaps are occurring, the most recent being in September following Hurricane Ida.