The American economy is doing pretty well as slowly the pandemic recedes from our lives. Weekly jobless claims fell last week to just 199,000 filings, an extreme low not seen since 1969. The tight labor market is a boon for workers: Wage growth in the third quarter of 2021 was at its highest in roughly two decades. And while there are concerns about inflation and supply chain woes, we’re seeing a much sharper economic recovery—and even a boost in some ways—after the pandemic than we did after the Great Recession.
But not everything is rosy. One area of particular political salience is rising energy prices. Earlier this week, President Joe Biden announced that he would order the release of 50 million barrels from the Strategic Petroleum Reserve to combat high fuel costs. The move is expected to have a limited, delayed impact on fuel prices over the next few months; its effect may be more psychological than anything else. But it also raises an interesting question: Why doesn’t the United States have more—and better—strategic reserves and national stockpiles of other products?
It’s an intriguing quandary after the last two years of economic dislocations. The pandemic’s arrival in the U.S. came with a nationwide run on, of all things, toilet paper and hand sanitizer. As the U.S. economy partially collapsed and demand for many goods and services sharply cooled, so did production and global trade. Thanks to years of “just-in-time” manufacturing, wherein private companies eschew stockpiles and warehouses, along with persistent underinvestment in infrastructure by both the government and private sector, sudden shortages of goods and materials are making it harder to reboot the global economy from its slumber.
The U.S. has a tortured history of maintaining its own stockpiles. In the 1920s, when airships and zeppelins looked like the way of the future, Congress created the National Helium Reserve to ensure a steady supply of the lighter-than-air gas. Airplanes soon obviated the primary need, but the reserve went largely unchanged until the 1990s when Congress, seeing it as obsolete, sought to sell off the stockpiles. That soon proved shortsighted since helium now has a wide range of industrial and scientific uses, ranging from medical supplies and LED production to particle physics research. Congress passed a last-minute bill in 2013 to avoid a “helium cliff” and keep the program alive in a reduced form.
In the 1990s, the federal government also began maintaining the Strategic National Stockpile, a national reserve of drugs, vaccines, and various medical supplies. That program received its first major test last year when Covid-19 struck the U.S. The results immediately showed the failure of that reserve. Federal agencies had repeatedly warned over the last decade that the stockpile would not have enough ventilators if a novel respiratory illness hit the country. A New York Times investigation earlier this year found that the SNS’s purchases favored “a handful of biotech firms” whose products “address terrorist threats rather than infectious disease.”
Other countries maintain sizable national reserves of key goods. China, which experienced horrifying famines in the mid-twentieth century, keeps national reserves of major food staples. According to state-run media reports earlier this year, China’s grain reserve holds roughly 650 million tons of rice, flour, cereal, and wheat and can meet market demands for three to six months. The country tapped its national pork reserve in 2011 to reduce prices in some areas and again this year after a virus outbreak affected much of its herd in 2018 and 2019.
The U.S. no longer has a national grain reserve of remotely similar depth. After major droughts and international food crises in the 1970s, Jimmy Carter’s administration set up national wheat and corn reserves, but the programs either ended or were significantly restructured in the mid-1990s. A successor, now called the Bill Emerson Humanitarian Trust, originally held four million tons of wheat. It now instead holds cash and commodities contracts, which it occasionally sells for foreign humanitarian purposes.
Some things can’t (or shouldn’t) be held as a national reserve. Congress, for example, probably has better things to do than try to ameliorate the shortages of PlayStation 5s and Xbox Series Xs with a National Console Reserve. Semiconductors, the root of many supply chain snafus this year, are too complex and bespoke to be stockpiled. The same problem goes for the current supply bottleneck of, well, glass bottles. Lumber prices skyrocketed earlier this year after the housing market and the construction industry began to rebound from their 2020 ebb, then quickly normalized, suggesting that the expense of maintaining a national lumber reserve might not be worth its potential impact.
But other reserves might be worth exploring. Fixing the Strategic National Stockpile should be a top priority, as the pandemic rush for medical supplies proved. A national stockpile of shipping containers, the ubiquitous and suddenly scarce workhorse of global trade, could make sense as a hedge against future trade disruptions. With an aluminum crunch driving up the costs of cans—and, accordingly, everything that comes in cans—Congress could consider stockpiling the metal for future shortfalls. (Maybe it could start with the roughly 1.5 million tons of aluminum that is currently sitting in a Vietnamese port thanks to a U.S. customs investigation.)
What really makes a national reserve work is more than just the type of thing it holds. It also requires careful foresight and planning, attention to detail and persistent oversight, and an aversion to short-term profiteering—qualities that the American political system just can’t muster these days.
