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News Link • Oil

It's Time to Privatize Our Stockpile of Crude Oil

• by Robert P. Murphy

Such a move would help ease the budget crunch (bringing in about $17 billion at current oil prices) but would also (partially) return the function of resource allocation back towards the private sector. If the government leaves prices alone, the market is the best mechanism for storing reserves and easing supply shocks.

What's the Purpose of the SPR?

The SPR was formed in 1975 amidst the scares over the OPEC embargo and perceived "energy shortage." As part of its membership in the International Energy Agency (IEA), the US committed to maintain a 90-day stockpile of net petroleum imports. [1]

The idea of the SPR is straightforward enough: The federal government will maintain a "strategic" reserve of crude, so that Americans will not be as vulnerable to a major disruption in the world oil market.

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