Tapping The Strategic Petroleum Reserve

(Bolding mine.) http://www.fe.doe.gov/programs/reserves/index.html

Should the SPR be tapped in light of the current run up of gasoline prices in the US?

FWIW, I say no. Two reasons:
[ul]
[li]America needs to get its oil addiction recognized for what it is and begin to grow up and seek/implement energy alternatives. I define alternatives to include alternative energy sources (e.g., solar, wind, nuclear, tides, waves, etc., but not corn ethanol), greatly increased energy conservation (e.g., turn off the damned advertising signs no more than 30 minutes after a business closes for the night) including strict enforcement of a national 55 mph highway speed, an elimination of any oil lobby tax incentives, greatly increase fleet mileage requirements, among other things.[/li][li]The SPR should be used only for its legally defined purpose.[/li][/ul]

For a very long time we have kept drilling to a minimum in this country for a variety of reasons, largely environmental. When oil was cheap and we had the money, this made a lot of sense. Use their oil first, preserve our own reserves for a time when oil is more costly and less available.

Now is that time.

And it is time to start tapping our own supplies, by expanding drilling.

I get very annoyed every time some jackass (whether the President or someone else) suggests tapping the Strategic Reserve over some short-term price hike in Oil. Goddamned stupid.

The recent price rise is not related to any shortages. That being the case, there’s no reason to believe that increasing the supply (by tapping the SPR) would result in a lowering of prices.

this x 2

What do you mean? The unrest in Africa has caused uncertainty in the oil market. Even if the ships keep coming in (and there may be disruptions anyway), service providers are buying up oil now in anticipation of a shortage. So yes, tapping the SPR would lower prices.

But still, we shouldn’t be using it. That’s for when we go to fight WWIII and we’re not getting any oil. A price spike is not a shortage, I agree. We’re still getting the oil we need. It’s just expensive.

I see this as a good thing. Higher prices for a long period of time will cause people to make long-term energy-saving decisions like buying fuel efficient vehicles and smaller, greener homes.

For a guy like me that doesn’t use a lot of oil, that’s a great incentive to keep prices high.

Prices are up because of speculation. In 2009, Libya’s outputwas about 2% of the world’s production - prices have most definitely gone up more than 2%.

Anyway, tapping the SPR is a dumb, shortsighted idea and it should never have been considered. And we all know whether the President does it or not, he’ll be criticized roundly. He should instead encourage development of alternative energy production and promote carpooling and walking and public transportation and such.

Pricing is based on the marginal unit of production. It is completely illogical to think that a 2% supply disruption should result in a 2% increase in prices. Think about it logically, if we had a 99% supply disruption, would you simply expect prices to double?

Wrong. The price is being driven up by commodity speculators, who never take delivery of the oil. They are betting the price will continue to rise, and will get out befoire it peaks and collect the profit. If a genuine shortage never materializes, these speculators will dump these contracts to minimize their losses, and the price will crash. This is a manufactured price spike.

http://finance.fortune.cnn.com/2011/03/07/speculators-double-down-on-oil/