This is the Cato Daily Podcast for Friday, September 26, 2008. I'm Caleb Brown. The Strategic Petroleum

Reserve is governed solely by the President, which means lots of power concentrated in one person.

Edo Senior Fellow Steve Hankey says if the Strategic Petroleum Reserve must survive,

it needs rules to make it a living asset.

The U.S. government, since 1975, has had a so-called strategic petroleum reserve.

This is made up of caverns, mainly in Louisiana,

where oil is purchased by the government and put in stored in the salt

dome so to speak and it's quite large it's now dwarfs the private inventories and also the drawdown rate how much they could pull out of the thing, is the equivalent of the total exports from

Kuwait and Iran on a daily basis, about 4.3 million barrels.

The case the government makes and the politicians is that in case

we have a national emergency or there's sanctions put on the US or something like

this an embargo like we remember the 1973 oil embargo that motivated

this thing in the first place.

That we need a big government inventory of oil so that we don't have a massive price spike and gas shortages

and gas lines and all this kind of thing. This is the kind of picture and rationale for the

thing. So it's supposedly an insurance policy for national emergencies and

oil shortages associated with these national emergencies.

The problem is, of course, no were never asked what the policy is written for

because in fact, the strategic petroleum reserve has been filled and particularly the

Bush administration since 2001 maxed out. They filled all the strategic petroleum reserve. So there's a lot of filling going

on, but very rarely is the strategic petroleum reserve ever used. So it's like a dead resource.

The government buys it.

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