RUNNING ON EMPTY
January 6, 2006
The experience in this country with the strategic petroleum reserve strongly suggests that such government-managed stockpiles are a waste of taxpayers' money. Rather than increasing the stockpile, the reserve should be emptied and closed, say the Cato Institute's Jerry Taylor and Peter Van Doren:
- Public stockpiles are far more expensive to maintain than many analysts realize; after adjusting for inflation, the petroleum reserve has cost federal taxpayers as much as $51 billion since 1975.
- The government has never employed the reserve in a manner that would temper the effects of a supply shock; it releases only a small number of barrels at a time.
- The globalization of oil markets ensures that the United States will always have access to Persian Gulf oil.
Regardless, getting rid of the public petroleum reserve would not mean destroying all oil reserves, explain Taylor and Van Doren; private oil inventories are three times larger than public inventories.
Moreover, the two assert that Americans should resist the drive to expand public stockpiles. Instead, we should sell while the selling is good.
Source: Jerry Taylor and Peter Van Doren, "Running on Empty," New York Times, January 3, 2006.
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