In January, a pipe split open at Bryan Mound. Bryan Mound is the largest Strategic Petroleum Reserve site in the country. It sits just outside Freeport, Texas. Crude spilled onto the coast. That pipe was on the list for the $1.4 billion repair program. The repair crew never got to it.

I can't stop thinking about this.

Bryan Mound is built to pump 1.5 million barrels a day in a crisis. It is the fastest site in the entire reserve. And it is leaking from a pipe nobody fixed. Right now, diesel sits at $6.18 a gallon. Every product in this country that moves by truck or train or barge costs more at that price. Your S&P 500 index fund carries about 9% in industrials. Those companies eat that freight cost every single day. It shows up in every earnings call. It squeezes every margin. The SPR was the one tool the government had to bring relief. I don't think most people realize how close to empty it really is.

If you go to my website today and look up the "Safe Trade Options Formula," you'll hit a checkout page. $29.97.

Don't go to my website.

I'm sending you around it. This link gets you a copy for $0. No cart, no card.

It's not posted anywhere public. I opened it for people on this list, and I'll be closing it again.

What's on the other side is the formula I use to decide trade size on every options trade I make.

Five parts. It sets your risk percentage, turns that into a contract count, and rounds down so one bad trade stays small. Works the same on $5,000 as it does on $500,000.

The front of the store will always be there. This way it won't.

Go around the checkout and get your copy.

P.S. Once this link closes, the only route left runs through the $29.97 page. Use the shortcut while it exists.

Last Thursday, the IEA announced it would push out another 20 million barrels of diesel to fight the Hormuz squeeze. The U.S. has put up more than 40% of the total since March. That has drained our reserve from 415 million barrels in late February to 283 million as of last week. The lowest level since October 1982. And the IEA wants more. U.S. officials in Paris last week lobbied for an extra 100 million barrels on top of what has already been pledged.

Here's what worries me. The Department of Energy projects the reserve will bottom out at 243 million barrels once the full 172-million-barrel release is done. That is 9.4 million barrels below the 252.4 million barrel statutory floor. Below that line, the president can no longer order a routine release. But the current release is structured as an exchange, not a sale. That loophole lets the government drain right past the line Congress drew. When it is done, the quick-draw power the SPR was built for will be gone.

Even 243 million overstates what we actually have. A GAO report from May found more than a quarter of the SPR's inventory is not available for drawdown. Locked in aging caverns with construction outages and equipment failures. The withdrawal system runs at just 61% of its original design speed. The refill system is even worse, at 56%. Three of six caverns at Bayou Choctaw have only one drawdown left before they risk losing their walls. A well at Bryan Mound failed without warning in May 2024. Four hundred thousand barrels of crude vanished into the earth. Strip out the barrels that are physically stuck, and the real cushion is closer to 180 million barrels.

The people running the system know how bad it is. DOE officials told the GAO they are "holding the SPR infrastructure together with Band-Aids." They said it is uncertain how long things will hold. I read that in a government audit. Not a blog. Not a headline. A federal audit. This infrastructure was built in the 1970s and 1980s. Designed to last 25 years. Engineered for five complete fill-and-drain cycles. It has been forced through dozens. The repair program is behind schedule and shrinking in scope.

The world offers no relief. Aramco CEO Amin Nasser said earlier this month that global stockpiles are "scarily thin" and rebuilding could take two years. Nearly 1 billion barrels have been drawn from stocks worldwide since the conflict began. Brent crude closed above $109 last Friday. Hormuz flows are down 23% from pre-war levels. At least 10 ships were attacked in the strait in the week ending last Friday. And China holds roughly 1.4 billion barrels in reserve. That is five times what we have left.

I get it. If you hold XLE, you are up 51.8% this year. Marathon Petroleum is up 197%. Valero is up 173%. Marathon posted $5.1 billion in net income last quarter. Refiners are feasting. But the same squeeze printing money for energy stocks is the force pushing diesel past six dollars. Diesel hit a record $6.53 a gallon last month. It has barely come down. Every industrial name in your portfolio feels that cost. The reserve refills about six times slower than it drains. Some barrels are not due back until late 2028. Nobody knows when the next Hormuz escalation hits. I just know the cushion will not be there.

Nine days. At 20.1 million barrels a day of U.S. consumption, the roughly 180 million usable barrels left in our reserve covers nine days. That is it. The reserve peaked at 727 million barrels in 2009. That was 36 days. We have lost nearly two thirds of our cushion in 17 years. Next time someone tells you the SPR has our back, remember that number. Nine days.

Salt caverns in Texas. Built when Gerald Ford was president. Engineered for five cycles. Forced through dozens. Held together with Band-Aids. Crude leaking from pipes the repair program never reached. That is what stands between us and the next oil shock. And it is draining toward empty.

More on this tomorrow.

— American Ledger