World oil stocks high, but US reserve still lags
If the United States suddenly found its overseas oil supplies shut off, it could immediately tap its 1 billion-barrel strategic oil reserve -- right? Wrong.
Seven years after the first oil embargo that rocked the US economy, the strategic reserve contains only 92 million barrels of crude oil -- or less than 10 percent of what the experts say would be needed in case of another shutoff.
At present rates, it would take years to expand the reserve to the recommended level.
Fighting between Iraq and Iran -- two of the world's greatest petro-powers -- has put new urgency into the reserve program. Just this week, the federal government began pumping 100,000 barrels a day into the reserve -- the first new oil added since the spring of 1979.
Some members of the Senate remain skeptical that the US is prepared to deal with an energy emergency which might result from the Iran-Iraq fighting. "I can't say I'm totally reassured," said Sen. Charles H. percy (R) of Illinois this week.
The Energy Department reports that it is watching "very closely" the fighting between the neighboring Mideast countries, but that so far there has been no disruption of oil flowing from Iran and Iraq.
Together, the two export 3.5 million barrels of oil a day, about 13 percent of all OPEC exports. Most of that oil, 3 million barrels, comes from Iraq and goes to France, Brazil, Japan, and some Communist countries. The US receives only 37,000 barrels daily from Iraq, and none from Iran.
Both the US and the rest of the world are in far better position to absorb oil shortages today than in past years because of a recent glut on the market of about 2 to 2 1/2 mllion barrels a day. John C. Sawhill, deputy energy secretary , spoke at a Senate hearing earlier this week of this "much-improved world stock situaton."
Mr. Sawhill reported that supplies in the US today are so high that they could carry the country through almost six months of shortages equal to those of the 1973-74 Arab embargo, when imports were cut by 1 million barrels a day. The Us currently imports about 6 million barrels daily.
But Senator Percy and Sen. Bill Bradley (D) of New Jersey have expressed concern that the nation's stockpiles of oil are still not nearly high enough.
The strategic petroleum reserve of 92 million barrels stored underground in hollowed-out salt domes in Louisiana and Texas could supply the country's needs for only 15 days. And additional stocks from private sources would add another 15 days.
Energy experts have projected that the US should have at least 1 billion barrels of oil on reserve, but so far filling the US strategic reserves has been a slow process. The supplies remained unchanged from spring 1979 until this week when oil began flowing into the domes, following congressional mandate to begin building the reserves again.
Storage for the oil reserves now can hold 250 million barrels. That capacity is expected to be doubled by 1986.
Dr. George Horwich, who recently left his post as senior economist in the Department of Energy's Office of Oil Policy to return to teaching, told the Monitor that to defend the country from oil shortages, "the best thing we can do is build a strategic reserve. It's something that I consider to be our greatest failure in the last four or five years."