THE RETREAT from the Strategic Petroleum Reserve is a national embarrassment, and a dangerous confession of failure.Instead of providing protection against future disruptions in this country's oil supply, the reserve has become a prominent symbol of American vulnerability.

Congress originally decreed that the reserve should hold at least 150 million barrels of oil by 1978. The Ford administration raised the target to 500 million barrels. The Carter administration doubled it to 1 billion barrels -- on paper. How much is actually in the strategic reserve? At present, it's 91 million barrels -- the equivalent of 11 days' imports -- and not a pint has been added since last summer. The principal reason for the standstill is that Saudi Arabia objects.

Some of the oil going into the reserve was imported from Saudi Arabia. The Saudis agreed to help out in last spring's shortage by keeping their oil production higher than they had intended. They said, correctly, that they were doing the United States a favor. They considered it unreasonable that they should further be asked to supply the oil for a reserve that most Arabs see, also correctly, as a defense against the Arabs' oil weapon.

The Carter administration acquiesced. Worse, it has now sealed that decision by dropping most of the money for the strategic reserve from its 1981 budget. That contributed nearly $1 billion toward balancing the budget.

It is urgently important to begin filling the reserve again. That $1 billion would have brought 100,000 barrels a day for the reserve. It's a rather modest amount, and it can be accommodated without any great effect on the market.

The present shortage is not in oil but in ingenuity and determination. By applying a little of those two qualities, the administration will find it possible to put 100,000 barrels of oil a day into its underground storage chambers without using foreign oil and without unbalancing the budget. The Naval Petroleum Reserve at Elk Hills, Calif., is producing more than that, and the government is auctioning it to commercial buyers. Some of those bids have gone wildly high, to the distress of the administration, which knows that high American prices only invite further increases by OPEC. The intelligent solution is to stop selling the Elk Hills oil for money, and instead swap it for domestic oil produced near the storage sites. Perhaps some imported oil would then go into the Houston refineries, replacing domestic oil put into storage. But that, it we may delicately say so, is none of our Saudi friends' business.

There are several ways to pay for it. Mr. Carter has imposed an oil import fee, for example, that will raise the price of gasoline 10 cents a gallon. Why not go up another penny? That penny would bring in the necessary $1 billion a year. Most drivers condsider it intolerably foolish to drive without accident insurance. Another penny a gallon is a small price for an insurance policy against the destructive impact -- on driving, on jobs and on the country's prosperity -- that is threatened by a serious disruption in the flow of imported oil.