For several months, the Strait of Hormuz was closed, sparking speculation of $8 a gallon gasoline and global recession. While the period caused some pain, it turned out to be more sanguine than many predicted. Much of the credit belongs to the Strategic Petroleum Reserve, one of the most effective government programs in history. The United States released more than 66 million barrels from its SPR over the course of the Iran conflict, helping to blunt the impact of around 20% of the world’s crude supply being shut in for four months.
The concept of saving for lean times is as old as humanity itself. The question is whether these massive oil reserves, and the demand they represent, could do more.
The SPR was established in the wake of the 1973 OAPEC oil embargo as an insurance policy against future supply shocks. The Defense Advanced Research Projects Agency, born from the same national security instinct after the surprise launch of Sputnik, was created to, in its own words, create “technological surprise for national security” by treating the premium on early-stage tech as a national security investment rather than a cost.
From DARPA, we received GPS, the internet, and a slew of advanced materials well before commercial markets would touch them. The F-35 absorbed enormous cost overruns because the Department of War decided stealth and sensor fusion were worth paying for regardless of price. When COVID hit, the federal government precommitted to buy hundreds of millions of doses before any had cleared trials, paying full price for a product that might never exist. The mRNA platform that resulted had been a scientific curiosity for decades. It became a vaccine in under a year.
Let’s go back to energy.
Energy security keeps showing up on that same list of national vulnerabilities, yet it’s the one area where the federal government still treats the underlying problem as a storage question rather than a technology question. The SPR can buy time, but it can’t buy resilience. Those are different problems, and conflating them leads to underinvestment in both.
Electrofuels, or e-fuels, are synthetic hydrocarbons made by combining hydrogen produced through electrolysis with carbon dioxide captured from industrial sources or the atmosphere. Chemically identical to gasoline, diesel, and jet fuel, they drop directly into the existing fuel pool without new infrastructure or new engines.
Are e-fuels inefficient? Deeply. Are they affordable? No. Production costs run $200 to $600 per barrel, equivalent to several multiples of crude even at current elevated prices. Will they replace fossil fuels anytime soon? Certainly not. But could they provide enhanced durability to our fossil-fueled economies and their disparate, disconnected supply chains? Absolutely.
The DoW has already started applying this playbook. Forward operating bases traditionally depend on long, vulnerable fuel supply lines. AIRCO and the DoW are jointly pursuing direct air capture-to-fuel pathways to let bases produce their own fuel on-site from available sunlight, wind, and atmospheric CO2, rather than wait on a convoy that might not arrive.
The opportunity is to scale that logic into the SPR itself, the institution built for this kind of patient capital. The reserve has a physical capacity of 714 million barrels. A tenth of 1% of that — 700,000 barrels — could be set aside as a dedicated e-fuels tranche, with the government committing to buy the lowest-cost e-fuels production until that capacity fills, capped per supplier so the demand signal spreads across multiple developers. At current production costs, that runs $250 million to $300 million, roughly the SPR’s annual operations and maintenance budget. Also not the kind of number that should sink a proposal modeled on a defense playbook that has happily absorbed F-35-sized cost overruns.
This kind of premium procurement has precedent. The Navy‘s Great Green Fleet bought advanced biofuels at above-market prices to cut the fleet’s dependence on foreign oil, and drew predictable congressional blowback over cost. Critics weren’t wrong to question overspending. They were wrong to call it wasteful. It was a down payment on a capability the Navy didn’t want to be without the next time a supply line was compromised. The Defense Logistics Agency already has authority under the Energy Independence and Security Act to pay these premiums for useful capabilities. What’s missing is the willingness to apply it proactively before a crisis requires it.
Energy security is one of the rare issues that draws support from both sides of the aisle. Republican hawks focused on supply chain independence and Democratic policymakers worried about fossil fuel volatility have more common ground here than the current political climate would suggest. Neither side has to win the decarbonization debate to agree that a country could use an additional gas station ahead of the next supply crunch.
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The Hormuz closure didn’t give us years to prepare. It gave us weeks before the SPR approached levels not seen since 1983. The deal buys time, but the reserve won’t refill quickly, and any new disruption will start from a weaker baseline. E-fuels will be commercially competitive someday, but whether we get there before the next crisis is a question of will rather than capability.
A 700,000-barrel e-fuels tranche in the SPR is a drop in a 700-million-barrel bucket. But it would prove the U.S. remembers how to build and scale the impossible. That’s a job worth giving the reserve, on top of the one it already has.
James Burbridge is director of business development at Spiritus, a company developing technology to pair behind-the-meter power generation with integrated direct air capture.