Low Oil Prices Fuel Reconsideration Of Petroleum Reserves

NPR reports:

The U.S. Department of Energy is considering the future of a public asset worth tens of billions of dollars: the Strategic Petroleum Reserve.

The SPR was created after a 1973-'74 oil embargo of the United States and other countries. Arab oil-producing countries stopped selling crude to the U.S. because they were upset over its support for Israel. The embargo led to steep price increases, rationing and long lines of frustrated drivers at gas stations.

The purpose of the reserve is to prevent this from happening again, by keeping at least a 90-day supply of oil imports on hand. Then, if there's another supply disruption, the government can step in and avoid a shortage.
On Dec. 23, 1973, cars formed a double line at a gas station in New York City. The Arab oil embargo caused gas shortages nationwide and shaped U.S. foreign policy to this day.


Currently the U.S. has enough to cover almost five months of imports. All that oil is stored in underground salt caverns in Texas and Louisiana. Most of them are shaped like huge test tubes, the tops of which are at least 2,000 feet underground.

"Salt is very good for underground oil storage," says Robert Corbin, deputy assistant secretary for the Office of Petroleum Reserves at the Department of Energy. He says it's impermeable so the oil doesn't leak out and the oil doesn't dissolve the salt.

The struggles of central planning.