Policymakers’ recognition of oil as imperative to national defense — namely, its use as fuel for a petroleum-powered Naval fleet — led to the creation of the Naval Petroleum and Oil Shale Reserve (the Reserves) in 1912. The Reserves were meant to insulate the United States from foreign dependency on oil during times of war.
The U.S. Department of Energy (DOE) administers the Reserves today. Set aside through a series of executive orders initiated during the Taft administration and motivated by national security concerns, “the government-owned petroleum and oil shale properties were originally envisioned as a way to provide a reserve supply of crude oil to fuel U.S. naval vessels in times of short supply or emergencies.”1
Though the Reserves remained largely undeveloped until the 1970s, the passage of the Naval Petroleum Reserves Production Act in 1976 authorized their commercial development and transformed the Reserves into a lucrative source of revenue for the U.S. government. Since then, the crude oil, natural gas and liquid products produced in the Reserves have been sold by the DOE at market rates, with revenues being deposited regularly into the U.S. Treasury.2
For the two decades that followed the passage of the 1976 act, the DOE managed the Reserves and “the properties served valuable functions not only as a source of revenue for the U.S. Treasury but also as a model for improved oil field practices.”3 In 1996, however, Congress determined that the Reserves “no longer served the national defense purpose envisioned in the early 1900s,” and authorized steps toward the potential divestment or privatization of the Reserves.4 This move was due in part to the U.S. Navy’s increased reliance on nuclear-powered submarines and aircraft carriers.
Until 2015, DOE retained oversight over just one of the original six oil fields set aside in the early 1900s: Naval Petroleum Reserve #3 (NPR-3), a field known as the “Teapot Dome” located in Wyoming. DOE finalized the sale of NPR-3 in January 2015.5
[1] “Naval Petroleum Reserves,” U.S. Office of Fossil Energy.
[2] “Naval Petroleum Reserves,” U.S. Office of Fossil Energy.
[3] “Naval Petroleum Reserves,” U.S. Office of Fossil Energy.
[4] “Naval Petroleum Reserves,” U.S. Office of Fossil Energy.
[5] “Naval Petroleum Reserves,” U.S. Office of Fossil Energy.