Strategic Petroleum Reserve
By Arnold Kling
With oil prices high, should the Strategic Petroleum Reserve be reduced? Steve Antler criticizes John Kerry for making such a suggestion.
In contrast, Fred Singer has called the Strategic Petroleum Reserve,
a wasteful effort by government to protect against an imaginary embargo. No such thing: Being fungible, SPR oil would merely lower slightly the price of oil to consumers around the world.
What Singer is saying is that oil is oil (see Oil Econ 101.) If, say, the Saudis stop selling us oil, we would just replace their oil with Venezuelan oil. Conversely, if we start selling oil from the SPR, that oil just glows into the market. It does not specifically replace Saudi oil.
So, Singer argues, why not just get rid of the SPR? He would sell off the SPR when oil prices are high. He also would sell it off when oil prices are low.
For Discussion. Is there an effective comeback to Singer’s point that oil is oil, so that there really is nothing strategic about the SPR?