Fuel for concern: Reserve hitting alarmingly low level

If you look at a map of American energy, all roads — or, more accurately, most pipelines — lead to Cushing, OK. It’s referred to as the “Pipeline Crossroads of the World.”

It’s where much of the nation’s crude gets measured, traded, and sent out to the refineries that turn it into the fuel that runs the economy, which makes it this country’s commercial hub.

Right now, Cushing is hovering near its “tank bottom” at approximately 20 million barrels. In the oil industry, that number is a red line. Once the hub dips below that threshold, according to oil analysts, we aren’t just running low, we are losing the pressure required to physically push that oil through the vast web of pipelines that lead to the refineries.

At the bottom of those tanks, now running dry, sits a noxious mix of sludge, sediment, and paraffin. According to industry experts, that can of stink can’t be pumped. When the petroleum levels get this low, the logistics of blending and moving crude become a nightmare of stalling flows and compromised quality.

Why Cushing Matters

Cushing is the ultimate sorting yard for American crude, acting as the critical bridge that connects inland oil producers with the heavy-duty refining infrastructure of NorthAmerica.

When the oil leaves those Oklahoma tanks, it generally feeds three massive markets:

• The Gulf Coast Refining Corridor: A massive volume of crude moves southbound via major arteries like the reversed Seaway pipeline system down to the sprawling petrochemical and refining hubs in Houston, Freeport, and Port Arthur.

• The Midwest Refineries: Cushing pipelines headed to the refineries also run north and east to keep the gas business burning at massive refineries throughout Oklahoma, Illinois, Indiana, and the upper Midwest, converting that crude into gasoline, diesel, and jet fuel for U.S. demand.

• The Global Export Market: Once the oil reaches the Gulf Coast, any excess that isn’t refined domestically is loaded onto tankers at major marine terminals to be shipped out to buyers across the globe.

Essentially, Cushing is the bottleneck that dictates how smoothly West Texas Intermediate (WTI) and Canadian crude get turned into the actual fuels running the daily American economy. If Cushing runs dry, the gears grind to a halt from Chicago down to the Rio Grande Valley.

Why the Reserve Went Abroad

To understand how Cushing got left out in the cold without a safety net, you have to look down south at the government’s Strategic Petroleum Reserve (SPR), which the feds have continuously depleted since the start of the Iran War Feb. 28 under the guise of stabilizing a volatile global market.

The United States Strategic Petroleum Reserve (SPR) has a total authorized maximum storage capacity of 714 million barrels. As of last week, the reserve is sitting at 319.49 million barrels. To put that in perspective, the federal stockpile is roughly at 44 percent capacity…and dropping. (Source: OilPrice Charts.)

Some people ask, the few who even know that the SPR tanks are running low and that Cushing tanks are bottoming out: “If we’re running dry, why did the U.S. sell its SPR to the global market instead of keeping it here at home?

It’s a fair question, rooted in common sense. But energy, in our modern world, is a global language, say the people in the know. If the U.S. had hoarded those reserve barrels, in intuitive fashion, the result would have been a localized disaster. By releasing that oil into the global market, we acted as a “seller of last resort.”

Even though they don’t talk much about it, this is one thing that most Republicans and Democrats can agree on — the oil crisis would have been much worse if we hadn’t sold almost half of our SPR on the global market.

Of course, the war was never supposed to last this long. At least that’s what we were told. Countless times. In two more weeks, though, the Iran War will be five months old and counting; and to make matters worse, as of this Monday, the Strait of Hormuz is once again sealed up tight — no cargo tankers moving. No oil and liquid gas flowing. No farm fertilizer.

Meanwhile, mainstream media is focusing on the price at the gas pumps, diesel, avgas. Most prices are still relatively low now, but what will they be come Labor Day?