Summary: GAO discussed work on the Strategic Petroleum Reserve (SPR) program. Except for the recent build-up of SPR, undertaken largely as a result of congressional interest, the United States is no better prepared to deal with a major oil disruption now than it was during the oil embargo, and almost all other energy emergency preparedness efforts are in various states of disarray. GAO is convinced that the nation needs a balanced energy emergency program, one which judiciously blends reliance on private oil markets with government programs. Such a program would greatly limit serious economic damage which oil import disruptions can cause. GAO believes that a specific SPR use plan should be developed to avoid ad hoc decisionmaking during a crisis. This use plan should be integrated with energy emergency preparedness plans. The question of SPR size has significant budget and national security implications and directly relates to decisions which need to be made regarding SPR storage capacity over the next several years. The Department of Energy (DOE) gave a low probability rating to the possibility of future supply disruption which would require a 1-billion-barrel reserve. If SPR is the nation's only significant insurance against an oil import disruption, the argument for a larger reserve is strengthened. But, if other well developed emergency plans exist, the argument for the currently planned smaller reserve is strengthened. While progress in filling SPR over the past year and a half has been commendable, DOE is now approaching the limits of its available storage capacity. Thus, its fill rate is tied to the rate at which underground storage capacity can be created. However, DOE has not fully examined options for accelerating the availability of storage capacity. DOE and Congress should explore the capacity expansion plans and options to achieve an average fill rate of 300,000 barrels per day until SPR is filled. The DOE practice of purchasing some heavier crudes for SPR should be monitored closely and modified to ensure that the oil in SPR will yield the specific products needed during an oil supply disruption.
