Don’t drain the Strategic Petroleum Reserve

Back in the 1970s, after Middle East oil embargoes triggered gasoline rationing and long lines at U.S. service stations, the Strategic Petroleum Reserve was created to cushion against energy shocks. Hundreds of millions of barrels of oil were stashed in caverns in Louisiana and Texas.

Four decades later, with gas lines a fading memory, the Trump administration wants to sell half of the oil in the reserve to raise an estimated $16.6 billion to reduce the federal deficit.

This is among the worst ideas in a budget full of unrealistic or wrongheaded proposals. Selling oil from the reserve is akin to a person with a lot of credit card bills taking items to the pawn shop rather than curtailing his spending or enhancing his income.

You can also call this the buy-high, sell-low school of budgeting. The reserve has been gradually filled at an average inflation-adjusted price of $74 for a barrel of oil. Oil is now trading below $50.

The funny thing is, when oil was above $100 a couple of years ago, few people were supporting sales. But since its price has fallen by more than half, Congress has enacted laws mandating sales in the coming years.

The first law came in 2015, just weeks after a plummet in oil prices, when President Obama and congressional Republicans needed offsets for a budget deal. The second and third came shortly thereafter to fund more infrastructure and medical spending.

Now Trump is getting into the act, endorsing what would be by far the biggest sale of oil so far. The irony here is that the irresponsible push to sell is coming principally from the GOP, the party that preaches fiscal responsibility.

Selling is the exact opposite of limited government. By converting oil into dollars and then using those dollars to fund government, a drawdown is essentially a spending increase — in this case, of $16.6 billion.

None of this seems to matter to a president desperate to make deficits look slightly smaller over the next 10 years. Nor do many people seem to remember why there is a Strategic Petroleum Reserve in the first place.

Until recently, the reserve was seen as a vital national security resource. In the event of a major oil disruption — say a war in the Middle East, an economic collapse in Venezuela or a monster hurricane in the Gulf of Mexico — it would provide a backup lasting for months.

Supporters of draining the reserve argue that America no longer needs it because companies are producing much more domestic oil, thanks to fracking and other new production techniques.

Indeed, America is producing more oil: about 9.3 million barrels a day compared with 5.5 million in 2010. And a good bit more could be produced if prices rose enough to make such a move economically practical.

In the event of a sudden supply interruption, however, American oil fields would not be able to ramp up quickly enough to meet demand. The Strategic Petroleum Reserve could. It can be accessed quickly and is located near the refineries and pipelines needed to get it to market.

In a volatile world, the reserve remains an important insurance policy. It shouldn’t be turned into a political piggy bank.