Critics attack financing of the US oil stockpile

One continuing burden inherited from the 1973-74 Arab oil embargo is America's costly and controversial Strategic Petroleum Reserve (SPR).

SPR critics acknowledge that this government-owned stockpile of crude oil provides what Congress asked for in 1975 - an effective cushion against future oil supply disruptions. Congressional investigators say that despite earlier technical problems, the Department of Energy's five SPR storage sites in Texas and Louisiana now have a proven ability to pump their 277 million barrels of crude oil directly into three major interstate pipeline systems if a national emergency develops.

But studies carried out for Rep. Toby Moffett (D) of Connecticut indicate that fraud and waste have inflated past SPR construction costs dramatically and still disrupt the program. Mr. Moffett's House subcommittee on Environment, Energy, and Natural Resources is continuing to investigate SPR operations.

''Based on the subcommittee investigations, it is clear that serious financial problems continue to plague the Strategic Petroleum Reserve,'' Mr. Moffett says. He explains that ''inadequate audit resources, an inefficient and poorly organized inspector general's office, and perhaps most important, an unwillingness on the part of Department of Energy top management to admit that a problem exists all contribute to an unnecessary waste of taxpayers' dollars.''

Moffett is calling for better financial-management procedures to ensure full accounting for all SPR spending.

A General Accounting Office report to be released by Moffett's committee this week includes criticism of SPR procedures in its criticism of the Department of Energy's financial-management systems.

The subcommittee spokesman says there is ''no conclusive evidence'' of SPR mismanagement but that investigations have been hampered by the Department of Energy's ''extremely secretive'' behavior. He charges that instead of running programs in a businesslike way as promised, the Reagan administration is allowing SPR contractors to bill the government ''for hundred of millions of dollars without any independent check on how this money is being spent.''

SPR proponents agree SPR has had management problems in the past.

But Alvin Alm, director of Harvard University's Energy Security Program, says that the benefits from having a readily available stockpile of crude oil already far outweigh any fraud and waste which may have occurred during the hurried initial phase of the SPR program.

Mr. Alm points out that the first Arab oil price hike turned 1972's ''relatively low inflation and sturdy economic growth'' into 1974's ''spiraling inflation and negative economic growth.'' Saying that similarly severe economic consequences followed oil price rises in 1979 and 1980, he warns that the West may have only ''a three- to five-year respite'' before facing another energy crisis.

Alm calls the SPR an ''extraordinarily valuable asset.'' He recommends increasing the SPR fill rate from the current 200,000 barrels per day to 300,000 in order to reach Congress's 750-million-barrel target by 1987 instead of 1990 as now planned. Even if a speeded-up program creates some wasteful spending, he adds, ''the level of expenditure would be minuscule when compared with the size of the economic problems which would be created by future supply shortages.''

Daniel Yergin, associate director of the Harvard Energy Security Program and chief author of the recent energy study ''Global Insecurity,'' calls the SPR ''good insurance'' against a future energy crisis. His concern is that current charges of SPR mismanagement might undercut the broad consensus needed to fill the SPR quickly and needed to draw up specific policies for how the SPR should be used to deal with an emergency situation.

SPR project manager C. Curtis Johnson admits problems marked the project's early years. But he says ''the big mistake would have been not to accelerate the program to get the oil into the ground.''

Energy Department Inspector General James Richards says that ''during the construction phase, there were lots of shortcuts, there were lots of problems, because it was a crash program under lots of pressure from high places to get crude oil stored quickly.'' His concern today in monitoring SPR operations is ''to ensure that we don't repeat the same mistakes made in the past now that we are going into a new construction phase.''

In 1977 there were charges that several million barrels of ''junk oil'' and hazardous wastes were dumped into one 17-million barrel SPR storage cavern. Mr. Richards says investigations are continuing because ''it is still possible that a crime may have been committed.'' But he adds that ''detailed test results show a good quality of refinable oil'' is present at all levels of that giant cavern.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.