"Taking steps to prepare for a severe disruption in the oil markets is vital to our economic and national security. By filling the Strategic Petroleum Reserve to its highest level in history, American consumers and businesses are more protected today in the event of a major disruption in our oil supplies, whatever the cause," said Secretary Bodman.
Since the President's directive, the Energy Department has continuously added oil to the SPR except when deliveries were deferred due to an oil workers strike in Venezuela from December 2002 to April 2003, and when the Department made a series of small loans to refiners after supply was physically disrupted by Hurricane Ivan in the Fall of 2004.
SPR inventory as of today stands at approximately 694 million barrels, and the remaining deliveries of oil under current contracts are planned for June, July and August.
All recent oil delivery contracts to the SPR were satisfied under the Royalty in Kind (RIK) program, in which the Federal government has received oil rather than cash as a royalty for production on the Federally-owned Outer Continental Shelf. The RIK program is managed by the Department of Interior's Minerals Management Service, and has provided a practical means to fill the reserve in a deliberate and cost-effective manner.
RIK deliveries will be halted once the SPR reaches 700 million barrels of inventory, and future royalties will be paid into the Federal treasury.
The Strategic Petroleum Reserve is the world's largest inventory of emergency crude oil, which is stored in deep underground caverns in salt formations along the Texas and Louisiana Gulf Coast. In the event of a severe oil supply disruption, the SPR can be called upon to protect U.S. consumers from economic harm, and to provide fuel for national defense.
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