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| By Sean Brodrick |
The U.S. Strategic Petroleum Reserve dropped by 9 million barrels in the latest figures, to 331.2 million barrels.
That's 208.2 million barrels of sour, 123.0 million barrels of sweet crude.
It’s also the lowest level since July 1983.
In other words …
- The lowest level since Return of the Jedi was playing in movie theaters — for the first time.
- The lowest since Ronald Reagan called the Soviet Union "The Evil Empire."
- The lowest since the first, primitive iteration of the Internet was invented.
- The lowest since the finale of M*A*S*H.
- The lowest since Michael Jackson first moonwalked across a stage.
To put it another way, the last time the SPR was this low, gasoline sold for 98.8 cents per gallon!
Now for the Really Bad News
The current drawdown in U.S. petroleum reserves is even worse than it looks.
For example, Cushing, Oklahoma, is the primary physical storage hub for U.S. crude inventories.
Inbound and outbound pipeline capacity is above 6.5 million barrels per day.
Total storage capacity is between 75 and 80 million barrels of oil.
Cushing starts to see “operational challenges” when levels fall below roughly 20 million barrels. That’s called “tank bottom.”
At that point, you cannot cleanly pump and blend from all tanks, and inventory is functionally stranded.
That’s when the system physically cannot move oil, even if there are still tens of millions of barrels on paper.
Cushing is at 20 million barrels now.
Cushing at tank bottom helps lock in a high floor for U.S. retail fuel prices during driving season. And if anything else goes wrong on the supply side, we will get price spikes.
How You Can Play It
One way to play a potential gasoline price spike is to buy the VanEck Oil Refiners ETF (CRAK).
It holds a basket of pure‑play and integrated refiners — companies that convert crude into gasoline, diesel, jet fuel and other products.
If gasoline prices spike, CRAK members will be printing money.
CRAK has an expense ratio of 0.61% and a recent dividend yield of 1.56%.
You can see CRAK is beaten down — much like oil. The next move should be higher. And it could even be a spike!
All the best,
Sean
