In the face of record crude oil and gasoline prices, many have called for suspending additions to the Strategic Petroleum Reserve (SPR). They argue that filling the SPR takes needed crude oil off the market and thus, suspending SPR fills will lower the price of oil and gasoline. Some have even quantified this savings in the 5-24 cent per gallon of gasoline range.

As the chart below shows however, it is extremely unlikely that suspending SPR additions will have any effect on price. The average SPR addition this year has been 40,000 barrels per day (bpd). This means that SPR additions comprise about .3% of US crude oil supply 1and is almost too small to measure in the context of a world crude oil market of approximately 85 million bpd.

To put SPR additions in context: Had the prohibition on exploration been lifted in 1995, ANWR would be providing an additional 1 million bpd. This is almost the amount of oil produced in Texas and would by itself approximately double the world’s spare production capacity. ANWR, in other words, would provide 25 times more oil than additions to SPR remove from our supply.

The current price of crude oil (and gasoline) reflects the fundamentals of supply and demand: worldwide demand (especially in developing countries) continues to grow and supply remains tight (world spare capacity is around 1 million bpd compared to as much as 6 million bpd in 1990’s). The weakening dollar, increased cost of producing oil, and geopolitical risk factors also contribute to the cost.