A Strategic Petroleum Reserve and the 1973 Oil Embargo

The United States has the Strategic Petroleum Reserve (SPR) which–as the name might suggest–is a government controlled oil reserve equal to roughly just over a month supply at current usage in case of interruptions to oil supplies, prompted in large part by the 1973 oil crisis. It's the largest strategic reserve in the world and the most famous–as these things go–but a number of countries have them, including European Union members thanks to a European Economic Community directive issued back in late 1968 that mandated they create a strategic petroleum equal to 90 days average consumption.

So that prompted me to wonder what would the effects be for the US if they had an SPR operational in 1973 with say 60 or 90 days worth of oil imports stored when the Organization of Arab Petroleum Exporting Countries declare their embargo? I don't really know much about the period so was curious. As for a point of divergence perhaps Nixon or some influential member of Congress reads about the EEC's directive and thinks it's a good idea or simply gets a case of keeping up with the Joneses, it's not really important.
 

hammo1j

Donor
I dont think it will cause the Arabs to rethink, but it will make the effects less severe.

I assume the military too would have sufficient reserves OTL and the purpose of introducing such a reserve is to limit economic hardship.

I suppose the question is: Would the US be able to step up production in the time the reserve bought?
 
No real change.
Price Controls and regulations on 'new' Oil vs 'Old' Oil and imported Oil is what caused the shortages. There always was plenty of Oil, it was just more expensive. The Embargo only lasted 2 months and took roughly 5% of the World Crude off the US and Dutch markets. Not all OPEC members were in on that action

Refiners could not use that more expensive oil without taking a huge tax penalty.

Without Nixon screwing up US Economic policies for 5 years at that point, it's likely the Embargo of 1973 would have been a footnote, slightly worse than the Embargos of 1956 and 1967 that no one remembers
 
for another take . . .


So, there was agriculturally-driven inflation before the Oct. ‘73 OPEC embargo.

Hmm. from http://agebb.missouri.edu/mgt/cropyldsmous.pdf

Year.....Corn......Beans.....Wheat bushels per acre
1970..72.4........26.7.......31.......rainy Spring cut yields, smallest corn Harvest since 1965
1971..88.1........27.5.......33.9
1972..97.0........27.8.......32.7..Soviet grain buys
1973..91.3........27.8.......31.6
1974..71.9........23.7.......27.3 ...last USDA planting restrictions removed, summer drought in Midwest after a rainy Spring
1975..86.4........28.9.......30.6 ...Soviet crop failures

The big change was that the Soviets went on a grain buying spree in 1972 and bean futures for '73 went to $11 a bushel on news that south american yields would be low. Normal was $6

Exports of grain and soybeans surged to 85.6 million metric tons in the 1972/73 crop year. That was nearly 70 percent more than the average for the five previous crop marketing years.
Prices for fertilizer jumped from the oil embargo in 1974
 
Hmm. from http://agebb.missouri.edu/mgt/cropyldsmous.pdf

Year.....Corn......Beans.....Wheat bushels per acre
1970..72.4........26.7.......31.......rainy Spring cut yields, smallest corn Harvest since 1965
1971..88.1........27.5.......33.9
1972..97.0........27.8.......32.7..Soviet grain buys
1973..91.3........27.8.......31.6
1974..71.9........23.7.......27.3 ...last USDA planting restrictions removed, summer drought in Midwest after a rainy Spring
1975..86.4........28.9.......30.6 ...Soviet crop failures
Yes, I see that there was a drop in bushels-per-acre in U.S. agriculture for 1974.

I think the part where the two economists are talking about poor harvests in ‘73 refers to international agriculture. Will look for an additional source, no guarantees.
 
I dunno. Would a supply disruption and price hime be sufficient to use the SPR at that point in the Cold War? I would think it would be reserved for wartime contingencies.
 
feature2_fig01.gif

https://www.ers.usda.gov/amber-wave...e-1970s-and-1990s-valuable-lessons-for-today/

USDA source saying there was an early ‘70s surge in ag prices

(And I think “nominal price” means not adjusted for inflation.)
 
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