Executive Summary The Strategic Petroleum Reserve has been almost uniformly embraced by politicians and energy economists as one of the best means to protect the nation against oil supply shocks. This study finds little evidence for the proposition that government inventories are necessary to protect the country against supply disruptions. Absent concrete market failures, government intervention in oil markets is unlikely to enhance economic welfare. A conservative estimate finds that the SPR has cost taxpayers at least $41.2–$50.8 billion (in 2004 dollars), or $64.64–$79.58 per barrel of oil deposited therein. Accordingly, the "premium" associated with the insurance provided by the...