Fill ‘er Up

If you eat a lot of canned chicken soup and your local market is having a half-price sale on chicken soup, it pays to stock up. It’s the same way with a country that uses a lot of oil. The best time to buy for future consumption is when prices are low. Right now, even though prices have recently strengthened, oil is still cheap compared to what it was selling for a few years ago and what it is likely to cost a few years from now. The prudent course, then, is to stock up, to put as much oil as possible into storage for future use. For reasons of its own, though, the Reagan Administration is planning to do just the opposite. It is being obtusely shortsighted.

The Energy Department has told Congress that it wants to cut the rate at which it is putting oil into its Strategic Petroleum Reserve from 75,000 barrels a day to 35,000. Why? Because that way it can forgo spending up to $2 billion a year--a saving that will be reflected in a reduced budget deficit. The saving, though, is illusory. All it does is ensure that more money will have to be spent to buy oil in the years ahead, when this Administration is gone and another one will have to worry about budget deficits. The Administration isn’t solving anything with this approach. It’s only pushing a problem off onto its successor.

At the end of February the strategic reserve held 517 million barrels of oil. Eventually there are to be 750 million barrels stored under federal control. A lot of energy experts think that this is too modest an objective. They argue for a reserve of 1 billion barrels, or even twice that amount, and they urge a significant increase in the fill rate of the reserve now, when prices are relatively low.

The purpose of the reserve is to protect the United States against any major interruption in oil supplies from overseas, and from international oil blackmail. If supplies are cut, the government could begin releasing the oil that it owns to the private sector, softening or even preventing any harm from shortages. A lot of oil in the reserve was bought at prices ranging from $28 to $36 a barrel. Now oil is selling in the $18-$19 range. The wise management decision would be to stock up at these prices. Instead, the Administration proposes to buy less. Congress ought to quickly and emphatically say nothing doing to that dumb idea.