Page 17


The great oil reserve snafu Austin The word “boondoggle” was coined in 1925, but it took half a century for the United States government to come up with the project that finally does the word justice. It was not until Congress passed the Energy Policy and Conservation Act of 1975in the process establishing the Strategic Petroleum Reservethat “boondoggle” got the chance to. meet its destiny. The Strategic Petroleum Reserve is a fairly innocuous-sounding scheme to buy up a huge reserve of oil to relieve the domestic crisis that would be caused by a cutoff of foreign oil importsimports now running at eight to nine million barrels a dayand store it in East Texas and Louisiana salt domes. But the Department of Energy \(and its predecessor agency, the Federal Energy Administratractors have missed nary a chance to screw things up. And now, just when it seemed that the Carter administration and the bureaucracy were going to give it up and let the boondoggle quietly die, there are new efforts under way in the Congress to revive it. Nobody in Washington really opposed the reserve’s creation. The nation and the Congress were reeling from. the 1973-74 Arab oil embargo, and the notion of energy independence was taking hold. Buy oil at today’s price, the Ford administration suggested, and store it somewhere. If another embargo or supply disruption threatens our economy, we will have enough oil to keep industry fueled for months. The very existence of the reserve, it was argued, would be a hefty diplomatic bargaining chip. The FEA figured a reserve of 500 million barrels of oil would do the trick. It would cost $8 billion, 90 percent of which was tagged for oil purchases. Four years later, there are 91.7 million barrels in the gi’ound; the estimated price upon completion is up to $25 billion; the program’s been riddled with bureaucratic bungling, deception, and outright fraud; it’s woefully behind on a schedule which DOE admits was “unrealistic and overambitious”; and now there’s no oil to buy. General Joseph DeLuca, the Strategic Petroleum Reserve’s fourth director who resigned early this year, summed it up best. Reviewing the project’s troubled and costly history before a congressional committee last December, the former Air Force comptroller admitted, “In the press of trying to get the job done, it just was not carefully considered in three aspects: engineering, costs, and scheduling.” Reflecting on that, Pentagon financial analyst and famed whistle-blower A. Ernest Fitzgerald remarked to the Observer: “What else is there?” Yet the current crisis in Iran, with its accompanying termination of Iranian oil imports, is being used as a rallying cry to get SPR moving again. Sen. Robert Dole has attached an amendment to the synthetic fuels bill to force the Energy Department to resume pouring oil into the ground at the rate of 100,000 barrels a day for the next year. Although the amendment surfaced before Iranian students seized the American embassy and American hostages in Teheran, it was offered on the Senate floor four days after the takeover. When the Observer asked Dole’s -executive assistant, William Fritts, if he could explain why his boss is offering the amendment, he said, “I can do it in one word: Iran.” He said the Iranian crisis demonstrates the vulnerability of our oil supplies and the SPR would be the only step short of military intervention the President could take in the event of a major cutoff. When asked about the seemingly endless problems the government has had with the reserve, Fritts laid on the anti-Carter rhetoric and said the difficulties didn’t arise until after Gerald Ford left office and DOE was created. In his words, “DOE has more or less screwed it up,” but “even in view of these problems, we have to have it.” Since it’s likely that this sort of thinking will prevail if, as seems certain, the decision on SPR’s future is made in the shadow of the Ayatollah Khomeini, we think it’s time to’ take a careful look at what’s been going on with the Strategic Petroleum Reserve.