The U.S. Strategic Petroleum Reserve was created in the 1970s to help guard the nation against oil supply shocks. Most recently, the Biden administration drained roughly 40 percent of the SPR to help drive down gas prices that spiked in the wake of Russia's invasion of Ukraine.
But since then, the Administration hasn't replenished the oil it removed. And according to Energy Secretary Jennifer Granholm, it's no biggie, really, because there's so much oil held in private stockpiles:
…the reserve still holds 351 million barrels — equivalent to nearly 56 days of total U.S. oil imports last year — though well below the peak of 727 million barrels it held during the Obama administration. That's on top of 424 million barrels that private companies were storing in the U.S. as of early October.
The administration has defended its handling of the reserve, saying it still holds ample crude to protect the nation's strategic needs and offer a cushion against price shocks. “I am not worried about the reserve levels at all,” Energy Secretary Jennifer Granholm told a House committee in September, adding: “It is the largest strategic reserve in the world.”
But it was much bigger. Replacing what was removed, however, would require the Administration to spend money on evil fossil fuels even as it rolls out the subsidy bandwagon for electric vehicles and green energy production.
Far easier, it seems, to leave the problem of replacing the reserve Biden threw onto the market in advance of the 2022 mid-terms to the next White House occupant. Joe got what he needed. His successor will get the bill to pay for it.
Or his successor could do something entirely radical: get rid of the SPR, and take away the profound political incentives to play games with a supposedly “strategic' oil reserve.
One reason for doing so comes directly from Secretary Granholm. If she's not worried that the current SPR sits at half capacity, then we shouldn't either, right? Her reason is the hundreds of millions of barrels of oil in private storage right now – a strategic reserve if there ever was one. Unlike a reserve built and maintained on political whims, a private reserve would fluctuate according to market forces – genuine need instead of political expediency.
But there are much deeper reasons for taking the Biden administration's opening on getting rid of the SPR. As Jerry Taylor and Peter Van Doren wrote several years ago in “Shut Down the Strategic Petroleum Reserve”…
“…the government shouldn't be in the commodities business. Decisions about when and how much to buy and when and how much to sell are better made by businessmen, not politicians who have no expertise or comparative advantage when making those decisions. Moreover, the government shouldn't be doing what investors can do for themselves. Anyone who wishes to hedge against a supply disruption — or a rise in crude oil prices — can easily do so by buying inventories or oil futures contracts. Consumers can hedge by investing in energy efficiency or reducing their exposure to high fuel prices by, for instance, moving closer to work or adjacent to mass transit systems. Worries about the macroeconomic impact of supply disruptions might appear to justify an SPR, but even if the Reserve increases net inventory levels, notice that the SPR hasn't done anything to ameliorate the oil‐related recessions of 1981, 1990 or 2008.”
So let's put the SPR to use. Sell the oil off as quickly as possible while high prices promise a nice return to the taxpayer. Give consumers a gift when the economy could certainly use a little relief. Then shut the SPR down, and end this senseless debate once and for all.
It's a policy prescription the next White House occupant should consider as he, or she, confronts the issue of how to fix the hole Joe Biden put in the SPR.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
