Due to the ongoing conflict between Russia and Ukraine for the last ten days, an oil crisis seems to be arising around the world. In the last few days, the price of oil has crossed the mark of hundred dollars per barrel. In such a situation, the effect of this oil crisis is being seen in all countries around the world including Europe to America.
But on such occasions, America’s eyes fall on the caves of oil reserves located in its southern states of Louisiana and Texas. And in view of the current situation, some other countries including the US affiliated with the International Energy Agency have decided to release 60 million barrels of oil to rein in oil prices.
The Biden administration has decided to release 30 million barrels of oil from its strategic oil reserves. America’s geological oil reserves are so large that it has been giving America an opportunity to meet its oil consumption and handle the supply in the oil market during such difficult times.
salt and oil
These oil reserves of America are present in salt rocks in 60 geological caves spread from Beton Rog in Louisiana to Freeport in Texas. Salt is very beneficial in preserving crude oil because both elements do not mix together. In such a situation, these caves are considered quite suitable for storing oil.
700 million barrels of crude oil can be stored in these caves. According to the US Department of Energy, as of February 25, 580 million barrels of oil are stored here. However, not much is visible on the ground, just a few wells and pipes.
These pipelines extend thousands of meters underground, with the help of which oil can be extracted by releasing high-pressure water. However, these caves’ built-in salt rocks are not completely stable. Their roofs or walls may collapse causing damage to machinery. In such a situation, the machines have to be kept very carefully.
And their maintenance also costs a lot, which is 200 million US dollars per year. But due to this, even after the crisis in the oil supply, America has been able to avoid its influence. Not only this, if need be, America can meet its energy requirement for several months without buying oil from outside.
Why America created oil reserve
The strings of making these oil reserves are related to the Yom Kippur war in 1973 in which Western countries supported Israel. Angered by this, Arab countries refused to give oil, which led to an economic crisis.
Due to this decision of Arab countries, there was a huge reduction in the supply of oil and by the year 1974, there was a quadruple increase in the price of crude oil. America had to face a huge shortage of oil due to this crisis.
American people had to stand in lines to fill oil in their vehicles. The situation was such that people were afraid of having their petrol stolen, to save them, people started carrying guns. During this period, America’s industrial structure was dependent on cheap oil and due to this crisis, it reached a state of going out of circulation.
In this way, in the year 1975, America had to build strategic oil reserves to protect it from the volatility of the oil market, so that American interests could be protected from such situations in the future. And the US energy infrastructure was affected during the 1991 Gulf War and Hurricane Katrina in 2005. But this strategic oil reserve made up for the shortfall in the supply of oil to America.
Courtesy of BBC