Publications: Notes at the Margin

SPR: "We Hardly Knew Ye" -- Political Timidity and Industry Pressure Sterilize Strategic Reserves (November 15, 2021)

 

This report’s title comes from the anti-war song “Johnny We Hardly Knew Ye.” It was first published in 1867 in London and describes the gruesome maiming of an Irish soldier fighting for England in Ceylon, now Sri Lanka.

 

The song title is also appropriate for describing the US Strategic Petroleum Reserve, or SPR. The reserve was authorized by the Energy Policy and Conservation Act (EPCA) of 1975. In the law, Congress ordered the Department of Energy to build facilities to hold substantial amounts of crude oil. The reserves were intended originally to meet the United States’ commitments under the International Energy Program (IEP), which obligated signatories to hold reserves equal to ninety days of imports. The same agreement also included a quaint feature that required members to share volumes when shortages occurred.

 

Today, the United States does not need the SPR. The International Energy Agency’s July 2021 tabulation of IEP obligations shows that no North American country need keep such reserves (reproduced here as Table 1, page 2).[1] However, as of November 5, the United States still has 609.4 million barrels in the SPR.[2] This oil is worth around $50 billion at today’s prices. So, one may ask, why would the United States not liquidate the oil?[3]

 

 

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