The USA has been stockpiling oil since the days of Jimmy Carter. Now we are faced with a crisis…it is going to be VERY expensive to heat your house this winter. Why doesn’t the US government release oil from the strategic reserve, and lower the market price?
We’ve been buy oil at peak prices…why can’t the gov. do US a favor for a change? :smack:
Everything’s going fine. What are you, some kind of terrorist?
Daniel
I don’t think the purpose of the reserve is to bring down market drivenprices. It appears that the $52 a barrel is market driven, and with use growing in areas of the world like China, we may see “high” prices from this point forward.
Well, would they really be doing you a favour? The added cost may provide the incentive you need to better insulate your house, or to learn to conserve energy. High oil prices may cut down on the amount of driving you do. Both of these might have long-term benefits in the form of reduced air pollution.
Because when gas prices go up, the market is telling people: “this commodity is getting scarcer right now, you better conserve it”. If you do something to influence the price, then you defeat the whole point of the market system. Besides, the reserves are there for a national emergency, not because it might cost you a few cents more to drive that riduclous gas guzzler you made the mistake of buying.
A portion of the reserve has been released recently.
The political back and forth is this issue. To significantly change the market price, a significant portion of the existing reserve would have to be released. Where would we be then if matters got even worse?
Couldn’t have said it better myself.
Because the purpose of reserves is to prop ~up~ prices, not lower them. When the price of oil (or wheat or grain) is low, that means american producers might actually have to compete with non-american ones. Of course, this is unacceptable, so the concept of reserves comes into play: when the price is low, the govt buys a shitload (from american producers of course) thus driving up prices (and profits for the american producers) and puts the shitload in ‘reserves’. Reserves are not in any way about national security or ensuring supply, they are about propping up prices and profits to protect certain specially chosen companies from competition.
The Strategic Petroleum Reserve isn’t nearly enough to drive down market prices over the long term. Oil is going to get more and more expensive, and we are simply going to have to adjust to that fact.
Meanwhile, they did release some of the oil recently, strictly to make up for interruptions in the flow from platforms in the Gulf of Mexico, following the hurricanes. This is in the form of a loan, and has to be “repaid” by the refiners. The Strategic Petroleum Reserve is not going to enable us to avoid the inevitable, but it does serve effectively as a “bank” to deal with short term disruptions in the supply chain.
FWIW, I agree with John Mace; this is one of the few areas in which I think Bush is behaving appropriately, and the Democratic party isn’t. I apologize for my earlier cheap shot.
Daniel
Right. Tapping the U.S. reserves is a very short-term fix for something that may or may not be a medium-term problem. People need to deal with it in their own ways if it is a problem for them and let the market dictate the future. The oil reserves are hardly infinite.
Sure it does.
Look, to answer the OPs question, the national reserves are for use in a national emergency, not to lower your heating bill.
At what point does “people freeze to death because they can’t afford heating oil” become a national emergency, then?
Who’s freezing to death because they can’t afford to heat the house?
Damn, as Jimmy Carter said-put on a sweater!
That’s an idiotic statement.
First, exactly how many people are freezing to death?
Second, there are plenty of other solutions to that problem, if it is a problem. If poor people need money to buy fuel to heat their homes, they can be given direct subsidies. Subsidizing EVERYONE who purchases fuel is probably the worst way to solve this “problem”.
When, y’know, it happens?
Perhaps more importantly is how small the reserves are compared to the demand. Currently there are 25 Billion gallons in stock (Sweet + Sour). In 2000 the US consumed 6.7 Billion gallons of number 2 heating oil. If you want to make the reserves available for general use they’d last about a month.