The Indicator from Planet Money - How will the US refill its dwindling oil reserves?

Episode Date: September 22, 2026

Whether it’s oil from Venezuela or somewhere else, the U.S. Strategic Petroleum Reserve needs to be refilled. The SPR is widely considered critical for energy security.  On today’s show, the challenges to refilling the reserves at a time of high federal debt and climbing gas prices. Fact-checking by Sierra Juarez. Your Next Listen — So… how long before these oil prices get REALLY bad? Connect with The Indicator — Sign up for The Indicator’s weekly newsletter! — Buy the Planet Money book — Find our socials, YouTube and more! — For sponsor-free episodes, subscribe to NPR+ Support public media with NPR+ and enjoy perks for over 25 podcasts like this one. This show’s perks include sponsor-free listening. Learn more at plus.npr.org. See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. During President Trump's inaugural address last year, he promised to refill America's strategic petroleum reserve, a.k.a. America's backup oil supply. We will bring prices down. Fill our strategic reserves up again, right to the top. Since that day, those reserves have fallen another 30%. A certain war in Iran has resulted in a closed strait of Hormuz,

which has prevented much of the world's oil from actually getting out. And in that time, the reserve has served as a price cushion, shielding Americans from the reality of low global oil supply. But now this backup oil is running out. But look, Trump knows this. He still wants to refill that reserve. His new answer? Venezuelan oil. It's the biggest oil deal and probably it's the biggest deal in the history of our country.

65 billion barrels or ours. Whether it's with Venezuelan oil, or something else, the reserve needs to be refilled because it is widely considered critical for energy security. This is the indicator from Planet Money. I'm Cooper Katzmakim. And I'm Ricky Mulvey. Today on the show, can Venezuela oil save the strategic petroleum reserve?

And what does all of this mean for our wallets? That's after the break. Back in the early 70s, Arab countries launched a massive oil embargo on the United States, following U.S. support for Israel during the Ompkipur War. This was at a time when the U.S. relied on imported oil. And the White House wants us to use 25 to 30 percent less gasoline in our 101 million cars. Well, after that, the American government realized, hey, maybe we should have a backup oil supply, and the U.S. Strategic Petroleum Reserve was born.

So this isn't totally unique. Some 30 countries have a backup reserve, Japan, Germany, Australia. But Siddharth Mishra says the U.S. version is special. The oil is stored in these man-made underground caves. These caverns are engineering marvel, the way they were created back then. Siddharth is a professor of petroleum engineering at Texas A&M. He says the U.S. government decided the most effective way to store millions of barrels of oil was not through metallic storage tanks, but salt caverns.

So engineers pumped massive amounts of water to dissolve the salt banks underneath the earth and create caves. These caves are not like where we can walk. These are not traditional caves. These are human-designed caves. The size of the cylinder would be somewhere like size of Empire State or a little larger. Yeah, making up all 100-plus stories of that building. And there are 60 of these things located between Texas and Louisiana that make up the Strategic Petroleum Reserve, aka SPR. SPR has been a backbone of American economic success, energy security for many, many years, as in the first time SPR came into its use was in 1991 Operation Desert Storm. Then during Hurricane Katrina, again SPR showed up to give us a safety net during the supply shock. Arab Spring, 2011, Ukraine War 2022, and currently what is happening in the state of Hormuz is also requiring American dependence on SPR.

If you drive in the U.S., the SPR 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. Just in the last six years, it's dropped 55%, read Ukraine and Iran Wars. But the risk of a low SPR isn't just about volume. The structure itself doesn't work as well with all this overuse. The lower the reserve gets, the more water you add, and there's more room for contamination of that oil. And refineries don't like contaminated oil, so it's harder to sell.

Also, that contamination can create a sludge that makes it harder to withdraw the oil quickly. And Withdrawing the oil quickly, that's kind of the whole point. SPR is designed for emergency withdrawal, which means we need to withdraw really fast. Over time, the overuse of the reserve has had a permanent impact. The reserves themselves are shrinking and making them weaker. As we put in more and more water, we start dissolving the salts. The salt cabin itself gets dissolved. So we are creating unstable structures.

Essentially, it's leaving the engineering miracle that's so it. impressed Sadarth, compromised. Sounds like we're playing a dangerous game here. Yeah, and the Trump administration has had their eye on solutions for a while, but it is not an easy fix. Joseph Micot 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. 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. 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. Basically, when companies wanted to extract oil from federally owned reserves, instead of paying the government, they just gave them oil to put back in the Strategic Petroleum Reserve. But now the administration is looking at some more unique strategies. Back in April, Energy Secretary Chris Wright offered digging up oil underneath military bases,

though I have not heard follow-up on that. But most recently, the headline solution is Venezuelan oil. A private company granted the U.S. 20% control of current and future fields that it operates in Venezuela. Yeah, 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 would have to be through some trading mechanism where the oil is sold and a not is purchased. Joseph, the energy security expert, he's bullish on the Venezuela deal. He thinks this trading thing could actually work. There are a lot of mechanisms that have to work for this plan to play out. But the key thing that it adds is a source of oil which won't cause large market

disruptions and doesn't require the United States at a time of high prices and fiscal imbalance to get Congress to agree to spend a lot of money to fill the SPR. In other words, anything that doesn't mean Congress buying oil seems awesome. Yeah, 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 underinvestment 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. Arnab Data is a managing director at Employ America, focusing on energy markets. He says this Venezuela thing, it's just kind of a hairbrain scheme. This Venezuelan swap idea,

like, 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. 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. Yeah, we don't need to go out for oil. We have plenty in the refrigerator. We've got it right here.

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 promised to return the oil sometime later at up to a 24% premium. I think that this is like a well-executed way of delivering to the market, but filling it back and also sending a signal to the market that there's going to be demand for U.S. barrels. Either way, oil supplies continue to get lower globally. Another straight is under Houthi control and at risk of closure. For Americans, who knows how much longer, the Strategic Petroleum Reserve can shield us

from even higher costs. If you like today's show, you should sign up for the Indicators newsletter written by me. This story actually came from a segment there. Once a week, we collect the best economic headlines. in stories that we don't always turn into podcast episodes. Every Friday in your inbox, sign up at npr.org slash indicator newsletter. This episode was produced by Julia Ritchie and engineered by Quasi Lee. It was fact-checked by Sierra Juarez.

Cake and Cannon is our editor, and the Indicator is a production of NPR.