Our Strategic Petroleum Reserve

 

 

"Hey! There is oil in them thar caverns!"

Our Strategic Petroleum Reserve was a good idea whose time has come and gone. Seriously. Most of us were alive in 1975 and remember why it was established. We were in deep, deep weeds due to our need for oil. OPEC had shown their true colors during the 1973-1974 oil embargo. In other words, they showed us they were not our friends - they were nothing but blood suckers.

When the reserve was first built, it was a smart idea. The plan was to stash away enough oil that in the event of another disruption from OPEC, we would have enough to last us for a bit over one month. Not much, but it was something.

The reserve consists of four separate facilities, all located in salt caverns on the Gulf Coast. Between the four facilities, the reserve could hold a bit over 700 million barrels. The reserve was designed to cover the nation's oil needs for 37 days (with 1974 domestic supplies) and 70 days with 2013 domestic supplies. I dare say the 70 days is even higher going into 2015 with our ever increasing supplies.

A problem has always been these numbers are a bit deceiving. The maximum amount of oil that could be released from the reserve is 4.4 million barrels a day. That being said, it would be well over a hundred days if we starting draining this reserve at 4.4 million barrels a day.

My feeling on this reserve is simple. It was outlived its purpose. It is old news. The world now knows that we are becoming an energy force to be reckoned with. We should release half of the reserve and keep the other half until 2020. Then release the rest. Why do this? First off, we don't need it as much today as we did in the 70's. It would save money by having two of the four facilities shut down.

Next, by releasing another 4.4 million barrels on the market, it would further depress prices. Would that hurt our domestic suppliers? To a degree, yes. But it would also be another huge body blow to bad guys like Russia, Iran, and ISIL would need high oil revenues to be used for nefarious purposes.

Anyway, this is just a thought. OPEC used oil as a weapon against us in the 70's by curtailing supplies. Today we can use oil as a weapon by increasing supplies. If this is not irony, I don't know what is. And I love irony.