Turning Rainy Day Oil into Clean Energy Gold: Funding Mission Innovation with a Strengthened Strategic Petroleum Reserve

Establishing a public-private agency to operate the US Strategic Petroleum Reserve, a common arrangement in other member nations of the International Energy Agency (IEA), can improve the reserve’s performance as an oil shock buffer in a systemically volatile market by strengthening its coordination with other government and commercial stockholdings and transportation infrastructure. Requiring oil companies to purchase and maintain oil in the reserve sufficient, in concert with other stocks, to meet the IEA’s 90-day strategic stockholding standard can protect the reserve from loss of functionality as a result of future federal budget–driven drawdowns or inadequate operating funds. The fee paid on oil production and imports to purchase the oil in the reserve will introduce an essential price corrective in the domestic oil market. Most important, it will release the large store of value locked in the little-used reserve to combat, through essential clean energy R&D, a monumentally bigger energy threat — climate change.