The U.S. Strategic Petroleum Reserve and Cartel Deterrence

This paper presents a novel purpose for the US Strategic Petroleum Reserve (SPR) for national energy security. In a repeated game framework, this paper demonstrates how a reserve of sufficient size can potentially deter OPEC from any noncompetitive quantity-setting behavior indefinitely, thus achieving indirect energy independence. The paper derives the minimal levels of reserves necessary to maintain a steady- fillll state in dynamic equilibrium. A calibration of the model returns feasible target levels for the SPR