Troeh strategic petro reserve npr 1461
A guard with assault rifle checks the area where oil would leave the Strategic Petroleum Reserve and head out into U.S. via pipeline. - 

The U.S. created the Strategic Petroleum Reserve after the oil embargo of the 1970s. Blake Clayton at the Council on Foreign Relations says that was the first time America faced its utter dependence on oil and realized, "These kinds of oil shortages can wreak havoc on the national economy." The official goal of the reserve remains to keep oil flowing in case of emergency. "Not just when supply is low, but when that shortage means the national economy could actually be derailed."

But the Strategic Petroleum Reserve has another, unofficial, function. The White House can tease the oil market with its 700 million barrels of sweet and sour crude, just sitting there. That's why you hear officials -- and the president -- constantly referring to the reserve in speeches as being "on the table."

What they're really saying is: Don't forget, we can tap that crude oil any time we want. If they do tap the reserve, the extra oil on the market will make prices drop, right away. If oil traders bet on too high a price, they'll lose money when the U.0.S releases its reserves, and they know not the day nor the hour that could happen.


Watch a short video animation to see how the Strategic Petroleum Reserve works. For more on its history, read the backstory.


James Koehler with the Truman National Security Project says when President Obama put 30 million barrels on the market last June, "Prices did drop, futures prices did drop for about a week there, and then we were back up to where we were before."

That's not a bad thing. The reserve is actually meant to stabilize oil prices. Koehler says, "Probably the strongest component of it is in terms of the threat to use it, rather than the use of it. Keeps people in check moreso than an actual release of oil."

The Strategic Petroleum Reserve may be more powerful "on the table" than in the pipeline.

Follow Eve Troeh at @evetroeh