Use the oil glut for defense
A congressional subcommittee seems to be getting nowhere in trying to find out why the Carter administration refuses to take advantage of the temporary worldwide oil glut to resume filling the US strategic petroleum reserve. Department of Energy officials, in effect, told the House energy and power subcommittee that they are "working" on the problem, weighing their options, and that an announcement of progress would soon be forthcoming. That is hardly reassuring in view of warnings by private and governmental research groups that the US is "woefully unprepared," as one group put it, to cope with another interruption in oil supplies. The subcommittee itself warns that US military preparedness is imperiled.
The State Department testified that it has no agreement with Saudi Arabia not to fill the reserve, and officials of one oil company said it could sell the US 10 million barrels a year, adding that the oil might go to China or the Soviets if the US isn't interested.
So, why the continued footdragging by the Carter administration? The most plausible explanation is that the White House does not want to upset OPEC, Saudi Arabia in particular, before the election. Energy Department officials deny any such motivation, but it would not be surprising politically if the President chose to avoid a step that might cause him to be blamed for a Saudi cutback in oil production. The Saudis, who have kept production higher than they would like to help the US, have threatened such retaliation if the Us resumed stockpiling.
No oil has been purchased for the reserve since November 1978, when the President halted purchases during a global shortage. Petroleum experts says there will be four to 10 months in which the US could easily buy oil at relatively low prices. When Congress enacted legislation last summer ordering the reserve to be filled, it provided entitlements that allowed for using domestic "old oil" at $7 a barrel, rather than the $30 plus currently paid for imported petroleum. These price controls will end September 30, 1981; therefore , relatively little time remains for making purchases under these favorable conditions. The failure to fill the reserve now, one analysis estimates, is costing US taxpayers $9 million a day in increased oil prices.
The US currently has 91 million barrels in reserve, the equivalent of 12 days's supply of imported oil. When he took office, Mr. Carter doubled the size of the desired reserve to 1 billion barrels. If Washington resumed purchases today, it might take until 1987 to reach that goal. A private research group warns, "There will never be a 'right' or painless time to fill the strategic reserve. Conditions in the world oil market over the next five years are likely to get worse, not better, and United States delay in filling the reserve only perpetuates an unacceptable level of vulnerability."
The failure of OPEC to reach agreement on an orderly, long-term pricing strategy this week bolsters such predictions, making it all the more important that President Carter demonstrate the political courage to start filling the strategic reserve without delay.