Imagine the Strategic Petroleum Reserve as a giant underground piggy bank for the nation’s oil. For decades, the rule was simple: don’t break it open unless the country is facing a true emergency. Yet with pump prices painfully high, the Trump administration is reportedly ready to reach into that piggy bank once more, offering another round of crude loans to trading firms and refiners. The intention, presumably, is to calm markets and offer some relief to American drivers. But analysts are pushing back hard, warning that the move could create “a perfect storm” rather than deliver the help people are hoping for. The Strategic Petroleum Reserve was created after the oil shocks of the 1970s, when the United States learned how quickly an economy can be paralyzed by a disruption in foreign oil supplies. It was designed to be a fortress, not a faucet. But in recent years, it has increasingly been used as a tool for managing price spikes, and the current situation takes that trend to a new level. The emergency release now under consideration is part of a much larger plan to draw down an enormous 172 million barrels from the reserve. That plan was authorized in March by President Donald Trump, who framed it as a necessary act of protection for American energy security at a moment of extraordinary global uncertainty. The event that triggered it was the outbreak of war with Iran and the effective closure of the Strait of Hormuz, the narrow waterway through which about one-fifth of the world’s oil typically travels. With tanker traffic threatened and markets panicking, releasing oil from the strategic reserve seemed like an obvious response. The problem, critics say, is that the intervention has expanded far beyond the original crisis and is now being used to address a fundamentally different problem—one that releasing crude was never going to fix. Every barrel lent out now is a barrel that won’t be available if the Middle East situation spirals completely out of control, and the more often the government opens the emergency vault, the harder it will be to refill.
To understand why another round of loans is so controversial, it helps to look at how the previous transactions actually worked. These are not ordinary sales. The Department of Energy lends crude oil to companies, and those companies are obligated to return the same volume later on. It is essentially a swap designed to boost near-term supply without permanently reducing government stockpiles—at least in theory. Between March and June, the DOE lent out more than 133 million barrels under this arrangement, which sounds like a lot. But the response to the latest offer has been lukewarm at best. The fourth round, which was supposed to make another 40 million barrels available, drew almost no interest. According to Argus Media, only 500,000 barrels were contracted in that round. Why? Because crude prices had fallen, and borrowing oil at a relatively high price only to pay it back later at a lower price is not a deal that trading firms and refiners find appealing. Then oil prices surged earlier this month, and the administration suddenly seemed interested in trying again. Officials are reportedly gauging market interest in releasing as much as 30 million barrels, with crude from the Bryan Mound and Big Hill strategic reserve facilities potentially offered for loading in November and December. As commodity analyst Giovanni Staunovo noted, it is not entirely clear what the higher bids would entail, and the DOE could simply choose not to award anything if the offers are not good enough. That uncertainty makes it hard to predict whether this latest round will even happen, or whether it will go the way of the previous disappointing round. But the fact that it is being considered at all speaks to the immense political pressure the administration faces as gasoline and diesel prices continue to weigh on American households.
Patrick De Haan, head of petroleum analysis at GasBuddy, has been one of the most outspoken critics of the idea. His reaction to the news was blunt, and his social media posts left no room for misinterpretation. “Why are we literally trying to create a perfect storm?!?” he wrote. In another post, he said the approach “will backfire and is not good.” De Haan’s argument is not complicated, but it runs against the conventional political wisdom that releasing more oil is always the answer to high prices. The reality, he says, is that the United States is not currently facing a shortage of crude oil. It is facing a shortage of refining capacity. Gasoline and diesel prices in this country are being driven by what happens inside refineries, where crude oil is transformed into the fuels people actually use. Across the globe, refineries are running near their limits, and there simply is not enough capacity to process all the crude that the market wants to turn into fuel. Adding more crude to the system does not solve that bottleneck. It is like pouring more water into a funnel that is already clogged; the water just sits there. De Haan also pushed back on the idea that oil is extraordinarily expensive right now, pointing out that prices are actually around or even slightly below long-term averages once inflation is considered. That may be cold comfort to someone staring at a $6 gas price, but it underscores his broader point: the current crisis is not about crude scarcity, and releasing another 30 million or 75 million barrels from the Strategic Petroleum Reserve won’t move the needle much. What it will do, he argues, is leave the country more vulnerable if a real supply shock strikes later.
The “perfect storm” warning becomes even clearer when another policy idea is added to the mix. As De Haan explains, some lawmakers in Washington are now talking about banning U.S. diesel exports as a way to protect domestic supply and lower prices. Senate Majority Leader John Thune has said he is “open to exploring” such a ban. In De Haan’s view, that would be a serious mistake, especially when combined with another round of SPR releases. Here is the key issue: the United States produces roughly 5.3 million barrels of distillates per day, while domestic demand is only about 3.6 million barrels. That means America already makes more diesel than its own drivers and businesses use. The reason diesel prices are so high is not a shortage on American soil; it is a global shortage of diesel, and that global shortage is what sets the international price that U.S. markets reference. Banning exports would not make American diesel cheaper, because the world price would still be high. It would simply remove an important source of supply from the global market, making the international shortage even worse and potentially pushing prices even higher in the long run. Worse, policies like this have a way of creating unintended consequences. If other countries believe the United States can simply cut off exports whenever it feels like it, they will be less willing to rely on American energy exports in the future, and that could damage the country’s position in global markets. Add an SPR drawdown that does virtually nothing to address the refining bottleneck, and you have exactly the kind of short-sighted policy mix that leaves the nation more exposed, not less. “We’re seemingly creating an environment that’s MORE risky, not less, for the long term,” De Haan told Newsweek.
There is also a practical question: would anyone even want to borrow this oil? De Haan is skeptical, and the recent behavior of the market seems to support his doubts. Oil prices have already started falling again. Brent crude, the global benchmark, dropped by more than 2 percent earlier this week to about $98 a barrel, down from nearly $109 just a week earlier. The sudden decline appears to be driven by investor expectations that a Saudi Arabian pipeline, which was shut down after attacks by Yemen’s Houthis, could soon reopen. When crude prices are high and rising, borrowing from the reserve can look like a tempting hedge. When prices are falling, the same deal loses its appeal. At around $90 to $100 a barrel, De Haan says, oil companies know where to find crude; it is not that hard to get. The real problem remains refining, and no amount of borrowed crude will change that. That is cold comfort for drivers, who are still feeling serious pain at the pump. According to the American Automobile Association, the national average price for regular gasoline was $4.47 per gallon as of Wednesday, up from $2.98 before the U.S. and Israel launched joint strikes on Iran on February 28. In California, the average price was an eye-watering $6.20 per gallon, and several other states—including Hawaii, Washington, Nevada, Oregon, and Alaska—were averaging more than $5. Texas had the lowest average at $3.96, followed by Indiana, Mississippi, South Carolina, and Louisiana. Those numbers make it easy to understand why politicians are scrambling to appear responsive, but they also illustrate how uneven the pain is across the country.
Diesel prices are even more dramatic. The national average for diesel stood at $6.52 per gallon, up from $3.69 a year earlier. In California, diesel drivers were paying an average of $8.44 per gallon, while in Texas the same fuel averaged $5.95. These are the kinds of numbers that ripple through the entire economy, raising the cost of food, goods, and every truck that moves across the country. It is no wonder, then, that the government is looking for a lever to pull. But the analysis offered by people like Patrick De Haan suggests that pulling the SPR lever may be the wrong move—and not just because it won’t lower prices much. The reserve exists to protect the nation from genuine energy emergencies. If the government keeps treating it as a routine tool for managing price spikes, it will eventually find itself caught short. The “perfect storm” scenario is not just about one bad policy; it is about several misguided policies coming together at the same moment. Releasing borrowed crude that nobody really wants, pairing that with a diesel export ban that would likely backfire, and draining a strategic stockpile that is meant to be a last line of defense: that is how good intentions can create worse outcomes. In the end, the message from analysts is simple. The current pain at the pump is real, but the cure cannot be found in the strategic reserve. The solution lies in addressing refining capacity, protecting the country’s ability to trade energy globally, and preserving the emergency stockpile for the actual emergencies it was built to withstand. Otherwise, Americans may pay more at the pump today and face far greater risks tomorrow.
