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America Can Lessen the Risks to World Oil Markets

America can lessen the risks to world oil markets posed by instability in countries like Saudi Arabia by releasing oil from the Strategic Petroleum Reserve.

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While all eyes are on Libya and the growing threat of civil war, the coming eye of the storm may be Saudi Arabia, a critical player in the geopolitics of energy currently on the State Department travel warning list as a “dangerous and unstable” country.

To safeguard U.S. national security interests, the Obama administration needs to develop a forward-looking strategy that helps Saudi Arabia usher in a pragmatic political transition while offering continued support to ensure internal stability. This strategy should include efforts to help both our nation and Saudi Arabia diversify away from heavy over-reliance on oil and toward greater use of renewable and more efficient energy use.

America can lessen the risks to world oil markets posed by instability in countries like Saudi Arabia by releasing, say, 30 million barrels of our own excess oil, held in the Strategic Petroleum Reserve. The reserve, developed in response to the Arab oil embargo, exists to help insulate the United States from price shocks or supply disruptions. It is currently just about at capacity, holding nearly 727 million barrels of oil, and could easily be tapped to calm global fears about oil shortages without depending on the Saudis to ride to the rescue. Releasing 30 million barrels at today’s prices would generate $2.9 billion in revenues that could be used to finance oil savings programs in a variety of areas.

Which brings us to the other key point: America must wean itself off oil. The Obama administration has already taken several important steps toward this goal, through policies aimed at fuel efficiency, clean fuel technology research and development, and getting more electric vehicles on the road. But as our Center for American Progress colleague Dan Weiss points out, there are even more steps we can take. We can:

  • Make our current vehicles more efficient, by adopting stronger fuel-efficiency standards, especially for medium- and heavy-duty trucks
  • Move toward new fuel sources like advanced biofuels, natural gas, and electricity
  • Invest much more heavily in public transit so that Americans actually have transportation options, rather than having to rely on personal vehicles for even very short intracity trips.

In fact, we could use some of the proceeds from Strategic Petroleum Reserve sales to help finance these efforts.

Implementing these changes on both energy and U.S. national security in the Middle East will require a fundamental shift away from how America has done business over several decades.

For more on this issue see:

Confronting New Saudi Realities by Kate Gordon and Brian Katulis

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