Our Secret Stash of Oil

Last week, in his State of the Union address, President Bush proposed to spend $65 billion from the government’s general fund to double the size of the Strategic Petroleum Reserve...

Rather than increase the size of our petroleum reserve, we should address its problems. One of these became obvious in 2005, after Hurricane Katrina and Hurricane Rita: The reserve is located on the Gulf Coast — the same place as half of our domestic oil production and nearly half of our refining capacity. Any hurricane (or terrorist attack) that affects our active energy supply will affect our backup supply as well...

And then there is the fact that, today, our imports, which account for 60 percent of the oil we use, increasingly come in the form of refined oil — gasoline and diesel. The reserve, on the other hand, stores only crude...

But perhaps the biggest problem with the reserve is that its costs never appear at the pump. The United States spends about 2 billion dollars a year maintaining the reserve, and billions more filling it, but because the money comes from the general fund, rather than from a “security tax” on gasoline, those costs are hidden from the consumer.

The reserve is only a small part of the larger story of hidden gasoline costs in the United States. For the last 100 years, the government has used money from the general fund to subsidize energy to keep it as cheap as possible for Americans, ostensibly to encourage economic growth. Now those hidden costs – which include tax breaks for the oil industry, accounting giveaways, direct subsidies for some oil and gas production and the cost of protecting oil and natural gas shipping lanes – may total around $39 billion a year, according to Doug Koplow, who studies energy subsidies for Boston-based Earth Track...