RACHEL MARTIN, HOST:
Did you know the federal government owns more than $30 billion worth of crude oil. It's called their Strategic Petroleum Reserve, and it's there just in case other countries stop selling oil to the U.S. The Energy Department is considering whether the country still needs so much oil in storage or if some of it should be sold off. Here's NPR's Jeff Brady.
JEFF BRADY, BYLINE: The reserve was created in the 1970s after Arab oil-producing countries stopped selling crude to the United States. They were upset over U.S. support for Israel. The embargo led to long lines at U.S. gas stations. All Things Considered talked with frustrated drivers back in 1974.
(SOUNDBITE OF ARCHIVED BROADCAST)
UNIDENTIFIED REPORTER: How long you been waiting in line?
UNIDENTIFIED MAN: About five minutes. I just cut in front of a whole bunch of people.
UNIDENTIFIED WOMAN: Did that guy behind you tell you that he cut into the line? Twice I got out and talked to him.
BRADY: Here's the basic idea behind the Strategic Petroleum Reserve. Keep at least a three-month supply of oil imports on hand so if another country stops the flow of crude again, the government can tap its reserve and avoid a shortage. All that oil is stored at four locations along the Gulf Coast, including one near Freeport, Texas, south of Houston.
ROBERT CORBIN: Right now, we're walking towards the well pad of underground cavern number five.
BRADY: Bob Corbin is a deputy assistant secretary in the Department of Energy. And he oversees the reserves, which are 2,000 feet below us in huge salt caverns. The reserve has been tapped for emergencies three times, at the start of the Gulf War in 1991, after Hurricane Katrina in 2005 and after the Arab Spring uprisings in 2011. Each sale was controversial and, some argue, not needed. Tom Kloza is with the Oil Price Information Service, a business that provides data about the oil industry. He calls the reserve a 1970s anachronism.
TOM KLOZA: You might as well be wearing bell bottoms as having 690 billion barrels in storage.
BRADY: The oil market has changed a lot over the past four decades. Now domestic production is on the rise. And oil imports have fallen. Kloza says U.S. drillers can more easily rush in to make up shortfalls.
KLOZA: Should there be some sort of interruption in Mid-eastern supply that sends prices skyward, we would see a very, very quick ramp up, particularly for some of the wells that have been drilled but uncompleted.
BRADY: Oil prices are relatively low now. Companies have drilled wells but not pumped the oil out yet. So there's essentially a private reserve of oil along with the public one. Kloza thinks the government should reduce the size of its reserve. Others think it should be sold off altogether. They say the proceeds could be used for everything from road repairs to investing in renewable energy.
The Department of Energy is conducting a big review of the reserve. Along with the existential questions, it'll explore things like the SPR's aging infrastructure. Bob Corbin with the Department of Energy says the reserve still fills a vital role for the U.S. economy, making it less likely gas prices will rise quickly because another country cuts off crude shipments.
CORBIN: You want to try and bring those prices back down as quickly as possible. The SPR can do that by releasing a large volume of oil in a short period of time.
BRADY: The Department of Energy's review of the Strategic Petroleum Reserve is just about finished. It's expected to be made public any day now. Jeff Brady, NPR News, near Freeport, Texas.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.