The Naval Petroleum Reserves have become a national anomaly, because the reserves are dwindling and there is no real relationship to the Navy. They pump away diligently, small islands of federal enterprise surrounded by the vast industry that provides the other 98.3 percent of American oil production. But the oil from the naval reserves doesn't go to the Navy; it's too thick and heavy to yield much of the light fuel that modern ships' engines need. Instead, the naval reserves' oil is sold to private buyers on the market. Now the Reagan administration proposes, sensibly, to sell the fields themselves and get out of the oil business altogether.
For an emergency -- a foreign embargo, or war -- this country has built up the Strategic Petroleum Reserve, now half a billion barrels of crude oil stored in salt domes along the Gulf Coast to serve both civilian and military requirements. The SPR provides better protection than the naval reserves ever could. The oil in the naval reserves is still as nature left it in the crannies of porous rock in certain geological formations. The two government- operated naval reserves together -- Elk Hills in California and Teapot Dome in Wyoming -- produce about 135,000 barrels a day. That rate cannot be accelerated, emergency or not, without wrecking the wells. But the oil in the SPR, in contrast, was earlier lifted to the surface of the earth through normal commercial production and then poured into caverns that act as tanks. From those caverns, it can be pumped up at a rate of 3 million barrels a day. For the Navy and everyone else, that's the kind of access needed in a crisis.
These two naval reserves, the administration estimates, could be sold for about $3.6 billion. The income from the fields is currently about half a billion dollars a year, but it's declining as the fields are slowly exhausted. In financial terms, the administration wants to trade future income for present cash that it needs to bring the deficit down. Beyond that, it thinks as a matter of principle that the government ought to get itself out of a business best left to private companies.
The administration is using the gross neologism "privatization" to indicate the sale of government assets to the private sector. Some of its other intentions in this direction raise difficult questions about the proper boundaries between public and private responsibilities -- the proposed sale of the electric power marketing administrations, for example, or the Landsat mapping satellites. But the sale of Teapot Dome and Elk Hills is not a hard choice.