NAVAL OIL RESERVES

NAVAL OIL RESERVES. In September 1909 Secretary of the Interior R. A. Ballinger suggested to President William Howard Taft that the United States should maintain naval oil reserves. After the necessary legislation had been passed, Presidents Taft and Wilson permanently withdrew from entry three Naval petroleum reserves—at Elk Hills, California; Buena Vista, California; and Teapot Dome, Wyoming—altogether involving about fifty thousand acres of public land. Between 1915 and the mid-1920s, the United States also set aside three Naval oil shale reserves, two in Colorado and one in Utah. Legislation permitting the Navy Department to take possession of the reserves, drill wells, erect refineries, and produce its own supply of fuel oil was not given until 1920. An act of Congress authorized the Navy Department to take possession of that part of the reserves against which no claims were pending, to develop them, and to use, store, and exchange their products.

Early in 1921, Albert Fall, the secretary of the interior, with the consent of the secretary of the navy, Edwin Denby, convinced President Warren G. Harding to transfer custody of the naval petroleum reserves to the Interior Department. This was done in comparative secrecy, imposed by the Navy Department on the ground that the action taken was part of its war plans, but in 1923 the measure came to the attention of the Senate, which began an investigation. This investigation discredited the Republican administration when the Senate discovered that Fall had received more than $400,000 from the companies that had leased Elk Hills and Teapot Dome. Through the ensuing scandal, Denby and Fall were forced to resign; Fall was convicted of bribery; and in 1927 the SUPREME COURT invalidated the leases Fall had granted.

By the mid-twentieth century, the strategic needs of the navy had changed such that petroleum reserves were no longer a priority. Because domestic demands for oil had increased, the DEPARTMENT OF ENERGY took control of the reserves and, in the 1970s, opened them for commercial production. In 1996 the Department of Energy sold the government's share of the Elk Hills field to Occidental Petroleum Corporation for $3.65 billion, the largest PRIVATIZATION of federal property in U.S. history. Shortly thereafter, the government transferred the two Naval Oil Shale Reserves in Colorado to the DEPARTMENT OF THE INTERIOR, and in 1998 the Department of Energy returned the land designated as Naval Oil Shale Reserve number three in Utah to the Uintah and Ouray Reservation, home to the Northern UTE Indian Tribe. In 2000, the Department of Energy retained control of the Teapot Dome and Buena Vista reserves, leasing 90 percent of the Buena Vista reserves to private oil companies.

BIBLIOGRAPHY

Werner, Morris, and John Starr. Teapot Dome. Viking Press, 1959.

Stratton, David H. Tempest over Teapot Dome: The Story of Albert B. Fall. Norman: University of Oklahoma Press, 1998.

La Botz, Dan. Edward L. Doheny: Petroleum, Power, and Politics in the United States and Mexico. New York: Praeger, 1991.

T. T. Read/F. B.

See also Teapot Dome Oil Scandal; Navy, Department of the.