The Strategic Petroleum Reserve (SPR) was created in 1973-74 in reaction to the oil crisis of the 70s. It is essentially a series of caverns along the Texas and Louisiana coasts that can contain more than 700 million barrels of crude oil. The US actually purchases crude oil from companies to put into the SPR. Sometimes oil companies will pay for drilling permits on federal land by providing oil to the SPR. When the President determines it is needed, the Department of Energy sells oil from the SPR in a competitive process (auction) to companies who then are able to sell it at their own discretion. Just recently 50 million barrels were sold to the highest bidders including Chevron, ExxonMobil, and Valero. Under US law these companies can then sell that oil to any company anywhere in the world. On occasion companies can actually borrow oil from the SPR but that must be repaid within a specific amount of time. It is repaid with crude oil.
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