The Strategic Petroleum Reserve is apparently not all that strategic, according to this Foreign Affairs piece, which notes that many of the world’s Western democracies stockpile oil as a hedge against an energy crisis, but then cannot decide what actually constitutes such a crisis. As a result, the SPR and other reserves are used quite sparingly, sometimes randomly, sometimes for political gain, and almost never effectively.
Oil supplies are so tight than any disruption in production can cause a huge economic shock. Yet we handle our strategic oil reserves like we’re socking cash away in a mattress, occasionally pulling out handfuls of it as needed, and usually after the bills fall due.
The piece argues that the nations with strategic reserves depoliticize and coordinate the management of them – that is, attempt to respond to dramatic, potentially catastrophic shifts in the oil markets as they happen. As the world economy has become more integrated, oil prices are no longer determined by the whims of a few sheiks but actual market conditions. You can’t anticipate every market emergency, obviously. But we ought to treat them as we aspire to treat other kinds of disasters – something we actively prepare for, manage proactively and avert if possible.
Markets process information. Is it too much to ask that our government at least attempt to do the same? Unfortunately, the answer is probably yes – as oil prices rise, it’s doubtful that either Barack Obama or John McCain will want to hand their discretionary power over the SPR off to a board of technocrats insulated from politics.
