By EUGENE GHOLZ and DARYL G. PRESSWHILE oil prices have declined somewhat of late, the volatility of the market and the political and religious unrest in major oil-producing countries has Americans worrying more than ever about energy security. But they have little to fear -- contrary to common understanding, there are robust stockpiles of oil around the globe that could see us through any foreseeable calamities on the world market.
True, trouble for the world's energy supplies could come from many directions. Hurricanes and other natural disasters could suddenly disrupt oil production or transportation. Iran loudly and regularly proclaims that it can block oil exports from the Persian Gulf. The anti-American rhetoric of President Hugo Chavez of Venezuela raises fears of an export cutoff there. And ongoing civil unrest wreaks havoc with Nigeria's output.
Even worse, this uncertainty comes in the context of worrisome reports that oil producers have little spare capacity, meaning that they could not quickly ramp up production to compensate for a disruption.
But such fears rest on a misunderstanding. The world actually has enormous spare oil capacity. It has simply moved. In the past, major oil producers like Saudi Arabia controlled it. But for years the world's major consumers have bought extra oil to fill their emergency petroleum reserves. Moreover, whereas the world's reserve supply once sat in relatively inaccessible pools, much of it now sits in easily accessible salt caverns and storage tanks. And consumers control the spigots. During a supply disruption, Americans would no longer have to rely on the good will of foreign governments.