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Section 161 of the Energy Policy and Conservation Act (EPCA) gives authority to the President under specified conditions to direct the Secretary of Energy to conduct a public sale of oil from the Strategic Petroleum Reserve. DOE sells SPR oil in a competitive auction to the highest bidder.
The Department may initiate a sale to respond to a severe energy supply interruption, to prevent or address lesser supply shortages or to conduct evaluations of drawdown and sales procedures. The Statutory Authority for an SPR Drawdown outlines the EPCA requirements for an authorized sale and drawdown.
The U.S. can release and acquire SPR oil through a mechanism known as an exchange. In an exchange, an entity (usually an oil refiner) borrows SPR crude oil for a short time period due to exigent circumstances and later replaces it in full, along with a premium of an additional quantity of oil. Exchanges usually occur during severe weather events, such as Hurricanes or in response to temporary disruptions, such as pipeline blockages and ship channel closures when a facilities normal scheduled deliveries are interrupted.