With the U.S. government's Strategic Petroleum Reserve plunging in the wake of the war with Iran, it is reportedly reviewing a plan to drill crude oil directly from underground beneath land held by military bases.
Bloomberg reported on the 6th (local time) that the U.S. government is eyeing crude oil buried on Ministry of National Defense property as an alternative to refill the Strategic Petroleum Reserve. The approach is being discussed as a way to sharply reduce expense because the government could secure barrels immediately without buying from private oil companies.
The Strategic Petroleum Reserve was built after the oil shocks of the 1970s, and at the current pace of releases, holdings are expected to fall to the lowest level since 1982.
In fact, the Joe Biden administration carried out a large release after Russia's 2022 invasion of Ukraine to rein in surging gasoline prices. Then U.S. President Donald Trump also ordered additional releases this year as crude prices spiked on mounting fears of a Strait of Hormuz blockade amid armed clashes with Iran.
As a result, gasoline prices in the United States are again under upward pressure. Recently, the retail price topped $4.5 per gallon for the first time since July 2022, stoking inflation fears.
However, some note that even if crude is drilled on military base property to refill the Strategic Petroleum Reserve, it will be difficult to stabilize gasoline prices right away. Time is needed for production, refining, and distribution, and the market impact may also be limited.
The U.S. government views refilling the Strategic Petroleum Reserve as a sensitive matter directly tied to national security and is continuing to explore practical alternatives with lower expense.