The Strategic Petroleum Reserve

GAO summarized the results of its reviews of the Strategic Petroleum Reserve's (SPR) activities to date and discussed whether: (1) the operation and management of the SPR could be improved; (2) the stored oil could be withdrawn, distributed, and sold in the event of another oil disruption; and (3) the SPR oil acquisition methods and procedures have been adequate.

GAO found that, since the creation of the SPR, the Department of Energy (DOE) has been responsible for developing and operating a three-phase plan to develop a 750-million-barrel SPR at six storage sites. However, the DOE response to reducing the federal deficit proposed an indefinite suspension on oil acquisition and facility development after SPR reaches 489 million barrels of oil at the end of fiscal year (FY) 1985. Early efforts to quickly fill the SPR led to problems with: (1) the development of drawdown-related systems and equipment; (2) control over contractors' activities; and (3) internal financial controls. However, DOE took some corrective actions to resolve the problems. DOE established an oil drawdown and distribution objective of 3.5 million barrels per day by FY 1987: however, GAO believes that technical and operational problems could affect drawdown capabilities. Although market purchases are generally fair, allowing exceptions to acquisition procedures could reduce oil acquisition costs. GAO analysis of the proposed moratorium showed that, while a lower level SPR required the lowest level of expenditures, a larger SPR would increase oil availability and drawdown capability and decrease the effects of increased oil prices during a disruption. As a result of GAO recommendations, Congress rejected the proposed moratorium and appropriated funds to continue facility development and to fill the SPR to 500 million barrels by the end of FY 1986.