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Fri September 28, 2012
Pork, Helium, Maple Syrup: Our Favorite Strategic Reserves
Originally published on Sun February 2, 2014 12:47 am
There are some things you just can't live without. Gas. Electricity. Bacon. No matter the price, you're gonna buy it. That's why many countries have strategic reserves of basic necessities. The reserves guarantee a temporary supply of the things people can't live without, and can serve as a short-term buffer against price spikes.
Different countries have different things they can't live with out. Here are a few of our favorite strategic reserves:
China is the only country, as far as we know, to stockpile frozen pork (441 million pounds, according to the New York Times). Pork is a staple of the Chinese diet and as living standards in China rise, so does the demand for pork. Inflation is a persistent worry in the country, and rising pork prices are a particularly big deal. While a strategic reserve doesn't keep prices from rising in the long term, it can prevent temporary price spikes.
The U.S. government stores vasts amounts of helium deep underground in the Texas panhandle. It goes back to the 1920s, when the government thought a stockpile might be needed for blimps. (War blimps!) Now the government is selling off the helium in reserve, and the helium market is sort of a mess. Jess Jiang has more in a story today.
This one's a little different; it's more about business than basic economic necessity. But it's too good to skip. The Federation of Quebec Maple Syrup Producers has a strategic maple syrup reserve. The Atlantic explains:
...harvesting maple is a fickle business, and that makes expanding the industry tricky. The trees need cold nights and mildly warm days to yield sap, meaning production can vary greatly year to year based on the weather. That's a potential problem for the big syrup buyers, whether they're bottlers or large food companies that make cookies or cereal. Quaker can't pour a bunch of time and money into developing a maple-and-brown-sugar-flavored version of Life, only to find out it won't be able to get enough of its ingredients, or that they'll have to pay through the nose for each liter of syrup. ...
The reserve makes sure there's always enough syrup for the market. As Farrell explained, each producer sells its harvest in bulk to the federation — a government-sanctioned cooperative — which turns around and deals it to bulk buyers. When production is high, the federation siphons a portion off to store in steel drums for future use.
The U.S. has petroleum stockpiled in a bunch of giant salt caves near the Gulf of Mexico. The U.S. (and several other countries) created reserves after the oil shock in the '70s, when foreign oil producers abruptly cut supplies, driving prices up. The last time the U.S. tapped into the reserve was in June of last year, during the Arab uprisings.