Message to the Congress on the Strategic Petroleum Reserve

To the Congress of the United States:

This is to advise the Congress that pursuant to Section 160(c)(1)(B) of the Energy Policy and Conservation Act (Public Law 94-163) as amended by Section 4(a) of the Energy Emergency Preparedness Act of 1982 (Public Law 97-229), I find it would not be in the national interest to fill the Strategic Petroleum Reserve at the rate of 300,000 barrels per day during Fiscal Year 1983.

When my Administration took office 22 months ago, one of my first actions was to direct a rapid acceleration of the pace of oil acquisition for the Strategic Petroleum Reserve. As a result, the fill rate during Fiscal Year 1981 averaged over 290 thousand barrels per day. The fill rate for Fiscal Year 1982 averaged 215 thousand barrels per day. This contrasts sharply with the average fill rate of less than 77 thousand barrels per day achieved during the four years of the prior Administration. Of the 288 million barrels now in the Strategic Petroleum Reserve, 178 million barrels, or 61 percent, were added during my Administration.

This Administration has also entered into long-term purchase commitments that will give greater assurance of maintaining our fill rate objectives over the coming year while lowering the cost of building the reserve.

Another major policy action instituted at the start of this Administration—immediate decontrol of the domestic oil market—has also contributed greatly to our energy security by reducing oil imports and stimulating domestic production. In the 22 months of my Administration, oil imports have declined dramatically. Our dependence on imports from OPEC sources is now only 51 percent of the 1980 level.

As a result of rapidly implementing these policy actions to enhance our energy security, the oil on hand today in the Strategic Petroleum Reserve would provide 130 days of complete replacement for OPEC imports in the event of an embargo. That is nearly six times the level of protection our nation averaged in 1980.

The commitment of this Administration to building and maintaining an adequate Strategic Petroleum Reserve is clearly demonstrated by the record of accomplishment. But we are equally committed to carrying out this program in the most efficient, cost-effective manner. The fill rate at which we plan to operate during 1983 reflects a careful balance between these two objectives. To operate at the 300,000 barrel per day rate would require extensive use of temporary storage facilities, which would significantly increase the cost of the program for very limited incremental benefit.

I must also note that increasing our fill rate objective to 300,000 barrels per day in Fiscal Year 1983 would force additional expenditures of over $1 billion. In the current economic climate, I believe that this additional expenditure would be harmful to growth and job creation because of the increased Treasury borrowing it would necessitate. Compliance with the increased fill rate would thus be inappropriate due to economic conditions affecting the general welfare.

RONALD REAGAN

The White House,

December 1, 1982.