Crude Oil and Heating Oil Reserves

Currently coal, oil and natural gas provide more than 85% of all the energy consumed in the United States, nearly two-thirds of our electricity, and virtually all of our transportation fuels. Moreover, it is likely that the nation’s reliance on fossil fuels to power an expanding economy will actually increase over at least the next two decades even with aggressive development and deployment of new renewable and nuclear technologies.

In the event of a major supply interruption, there are two reserves that could be released into the market on the Presidents order. They are:

Strategic Petroleum Reserve
The U.S. Strategic Petroleum Reserve is the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 1973-74 oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.
The Energy Policy Act of 2005 directed the Secretary of Energy to fill the SPR to its authorized one billion barrel capacity. This required the Department of Energy to complete proceedings to select sites necessary to expand the SPR to one billion barrels.

Northeast Home Heating Oil Reserve
Of the 7.7 million households in the United States that use heating oil to heat their homes, 5.3 million households or roughly 69 percent reside in the Northeast region of the country - making this area especially vulnerable to fuel oil disruptions.

On July 10, 2000, President Clinton directed Energy Secretary Bill Richardson to establish a two million barrel home heating oil component of the Strategic Petroleum Reserve in the Northeast. The intent was to create a buffer large enough to allow commercial companies to compensate for interruptions in supply during severe winter weather, but not so large as to dissuade suppliers from responding to increasing prices as a sign that more supply is needed.

Two million barrels would give Northeast consumers adequate supplies for approximately 10 days, the time required for ships to carry additional heating oil from the Gulf of Mexico to New York Harbor.

About the Author:
Chris Jent is Chief Marketing Officer of Triple Diamond Energy Corporation . Triple Diamond Energy Corporation is an independent producer of oil and natural gas. Located in the Dallas area, the company specializes in acquiring the highest quality prime oil and gas properties.