COLUMN-U.S. should maximise uncertainty about SPR release: Kemp
Current SPR holdings are sufficient to cover around 70-75 days worth of net crude and product imports, but commercial crude and product stocks would cover another 110 days, so the United States is comfortably in compliance with IEA obligations, even if stocks are not officially held for strategic reasons.
LEGAL BASIS FOR U.S. RELEASE
The U.S. Energy Policy and Conservation Act (codified at Title 42 Chapter 77 of the United States Code) authorised the creation of a reserve of up to 1 billion barrels, though actual storage has never approached this level, and the SPR is currently operating close to its physical capacity (42 USC 77 Section 6234).
Crude may only be released and sold following a presidential finding that "drawdown and sale are required by a severe energy supply interruption or by the obligations of the United States under the international energy program" [IEA mandated stock releases] (Section 6241 (d)(1)).
The presidential determination must include three findings: "(A) an emergency situation exists and there is a significant reduction in supply which is of significant scope and duration; (B) a severe increase in the price of petroleum products has resulted from such emergency situation; and (C) such price increase is likely to cause a major adverse impact on the national economy" (Section 6241 (d)(2)).
Smaller releases up to a maximum of 30 million barrels in total spread over no more than 60 days can be authorised to meet the adverse impact of smaller-scale disruptions including domestic shortages (Section 6241 (h)).
Outright releases, unilaterally or as part of coordinated measures with other IEA members have been rare. The IEA authorised coordinated releases in 1991 in response to the Gulf War and again in 2005 following hurricanes Katrina and Rita.
Temporary sales to help refiners cope with logistical problems, coupled with a commitment to replace borrowed oil within a specified duration, with additional barrels as an "interest payment", have been more common. The United States used the SPR on 10 separate occasions in the decade leading up to 2009 to provide temporary relief to refiners, according to the IEA, employing a sale-and-buyback system. Continued...