Transportation Planning for the Strategic Petroleum Reserve Should Be Improved

LCD-78-211: Published: Oct 18, 1978. Publicly Released: Oct 18, 1978.

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To minimize the vulnerability of the United States to the effects of a severe energy-supply interruption and to provide limited protection from the short-term consequences of interruptions in supplies of petroleum products, Congress provided for the creation of the Strategic Petroleum Reserve (SPR) for the storage of petroleum products. The current goal is to have 1 billion barrels of crude oil in storage by the end of 1985 and 500 million barrels by the end of 1980. On July 31, 1978, there were 35 million barrels of crude oil in storage. The Department of Energy (DOE) has the responsibility for developing a comprehensive plan for transporting the crude oil.

DOE has not developed a comprehensive plan for transporting the crude oil, nor has it prepared overall transportation cost estimates. Neither the December 1976 SPR Plan nor the May 1978 amendment had specific information on transportation plans and costs. Transportation costs were not broken out separately in the $7.5 to $8 billion estimate of the total cost of SPR. The impact of the Cargo Preference Act should be a major consideration. Adherence to the act's requirements will raise transportation costs substantially, but DOE has not developed the information needed to accurately quantify these costs. The Maritime Administration and at least two oil companies disagree on whether U.S.-flag tankers will be able to transport 50 percent of the crude oil for SPR as required by the Cargo Preference Act.

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