Congress Drained the Oil Reserve and Now We're on Our Own

Congress drained the petroleum reserve, and now a Houthi attack will spike diesel prices.

I filled up my Silverado at the Co-op on Highway 13 this morning. The diesel pump read $4.19. That is thirty cents higher than it was a month ago, and the reason is in the news. (The last I checked, the national average was around $5.13 a gallon; the local Co-op is always a little cheaper.) Yemen’s Houthi rebels fired on two Saudi tankers trying to move oil out through the Red Sea, the last safe waterway out of the Middle East after someone closed the Strait of Hormuz. Yesterday Brent crude topped $100 a barrel for the first time in two months, and the analysts at ANZ told the Journal they expect it could reach $120 if the disruptions deepen, while Baringa warned the oil market could go higher unless things calm down. The oil market has a few buffers, but the biggest one that was supposed to protect this country is nearly empty.

The U.S. Strategic Petroleum Reserve was built after the 1973 embargo specifically for a moment like this. Four underground salt domes on the Gulf Coast were supposed to hold up to 714 million barrels of crude, enough to keep the country running for months if tankers stopped coming. The reserve reached its highest inventory on December 27, 2009 — 726.6 million barrels, at the then-authorized capacity of 727 million barrels. It is now a fraction of that. Congress and the White House sold off tens of millions of barrels over the past few years — close to 300 million barrels between 2021 and 2024, according to the National Taxpayers Union, and the Bipartisan Budget Act of 2018 mandated another 100 million in sales through 2027 — and the facility maintenance backlog has made refilling difficult. The Journal roundup notes that “global stocks are low, including in the U.S. Strategic Petroleum Reserve.” That is a polite way of saying the emergency tank is dry because Washington treated it like a political checking account. Now a militia with Iranian rockets can threaten the whole global oil supply, and we burned through the backup before the trouble even got here.

Since President Carter said in his 1980 State of the Union address that the United States would use military force against any country that attempted to gain control of the Persian Gulf region, the U.S. has organized an entire combatant command — CENTCOM — around keeping the tankers moving. The Strait of Hormuz, through which something like a fifth of global oil consumption once passed, has been shut for weeks, and the alternative route through the Red Sea and the Suez Canal is now under fire. Two Saudi tankers were hit, and the Journal reports that “a disruption to the Red Sea and Bab el-Mandeb shipping would undermine one of the market’s most important workarounds.” The workaround was the plan. The reserve was the plan. Now both are gone.

The administration keeps threatening Iran with massive attacks, and the Houthis keep firing. The Journal notes that “Iran hasn’t so far responded to President Trump’s threats,” and Ritterbusch & Associates thinks the weekend could bring more of the same. China has been drawing down its own crude inventories to keep the global market from spiraling, but that cannot last forever. The economists at Capital Economics say China can probably keep imports low for months, but if the Strait of Hormuz stays closed much longer, “oil markets are still likely to reach a tipping point … potentially pushing crude prices to $120 a barrel or higher.” Every one of those dollars lands on the pump in Adams County.

I am a small-engine mechanic. I do not trade oil futures. But I know what diesel costs because I buy it, and I know what the LP truck charges because I heat my shop, and I know what happens to the price of a load of gravel or a shipment of seed when the fuel that moves it jumps thirty cents in a month. The price of diesel is the price of everything that comes into a small town — groceries at the Family Dollar, the feed corn the neighbor still buys, the propane I need to keep the shop warm when the kids are in school, the gas that Sara puts in the minivan to get to the elementary school. When the oil price spikes, the county pays. And the county is paying.

The idea that an industrial economy treats land and people as expendable inputs was something like what Wendell Berry wrote about in The Unsettling of America. The SPR was supposed to be the one input we kept off the table — a reserve that said, whatever the market does, this country keeps a tank full for emergencies. We emptied it to shave twenty cents off a summer’s gas prices and keep an election cycle quiet. Now we are in the emergency and the tank is low. I cannot fix that at my bench with a torque wrench. All I can do is read the news, watch the diesel price climb, and write down what happened when Washington decided the reserve was a political tool instead of an insurance policy. The Houthis fired on the tankers. That is the spark. The reason it will burn through this county’s checking account is that we sold the fire extinguisher years ago, and the people who sold it are still in office.