# Why DON'T WE Tap The Strategic Petroleum Reserve? **URL:** \ **Category:** Great Debates\ **Created:** [March 7, 2011, 6:20pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810 "2011-03-07T18:20:39Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [March 9, 2011, 4:17am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/61 "2011-03-09T04:17:44Z")
> [@Lemur866](#): > > If by “a few miles” you mean 100 miles, then yeah. no I mean a few miles. you can download the google earth maps showing area 1002 (the area in ANWAR to be drilled) from [sierra club](http://www.sierraclub.org/arctic/maps/). You’ll be able to see where the wells are now in relation to area 1002. There is an arbitrary line in area 1002 which was an area set aside for future oil exploration. You can see the oil wells to the west of the line. Congress has already limited the foot print allowed for oil drilling in this area so it won’t interfere with Alaskan wildlife. There is no good reason not to drill our own resources particularly since we need them in the short run while we transition to more efficient power sources. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [March 9, 2011, 3:40pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/62 "2011-03-09T15:40:40Z")
The reason we should not hit the reserve is because there is no oil shortage. The supply is high. In winter the demand is low. On BBC news this morning, they were discussing the rising price of gas. They all agreed there is not shortage. As a matter of fact, they said the Libyan shortage was easily covered by the Saudis. They agreed that speculation was causing the price rise . They just have to get a hold of some of the guys on this board to set them straight.How can they be so wrong. Hell .I even heard Fox news talking heads chat about oil speculators causing price rises. ---
**Author:** ![Magiver](https://avatars.discourse-cdn.com/v4/letter/m/4491bb/32.png) [@Magiver](https://boards.straightdope.com/u/Magiver)\ **Post date:** [March 9, 2011, 4:29pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/63 "2011-03-09T16:29:30Z")
> [@Lemur866](#): > > Except ANWR isn’t a “reserve” in the sense that if we pump the oil from ANWR we’ve got no worries. ANWR isn’t going to meet our consumption, it won’t be free to develop ANWR, and it will take a decade before oil from ANWR reaches the market. Oil is a global commodity, and a little more domestic oil production isn’t going to move the price by more than a few pennies. > > Oil is never going to be $500 a barrel, because at that price nobody is going to drive a gasoline car, everyone will have to switch to electrics. Or we’ll manufacture liquid fuel from coal or biomass. You’re right that ANWR (actually just area 1002) isn’t going to meet our consumption but when you start adding up all the untapped reserves it makes a difference. Venezuela and other new discoveries in shale oil represent increases in the total DAILY flow of oil which is what affects the price. It doesn’t matter what the world’s total reserves are because we aren’t pumping at full capacity now and we’re working toward energy independence. As a function of national security, we should encourage oil exploration beyond those areas that represent controlling interests (in the short term) while we work on transitional technologies. We need to get off the oil standard and we WILL but it isn’t going to happen overnight. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 9, 2011, 4:44pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/64 "2011-03-09T16:44:44Z")
[QUOTE=gonzomax] It is being done by huge investors. I gave you a site last time showing the Saudi Minister of oil saying the price was 60 percent up due to speculation. It is sad that you never learn. [/QUOTE] If you are trying to bait me into explaining this to you for about the 1000th time it’s not going to work. I’ve beat my head against the wall of your ignorance on this subject too many times to bother doing it again. Perhaps someone else will bother explaining it to you (again), but that person will be me. I will say that it’s sad that after all this time, you don’t even understand what my argument actually is, as you continue to use your own strawman. Here’s a hint…no one is saying that speculation (which is a fundamental aspect of ANY commodities market) has nothing to do with the price. -XT ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [March 9, 2011, 5:06pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/65 "2011-03-09T17:06:47Z")
> **[Will Federal Regulators Crack Down on Oil Speculation?](https://www.thenation.com/article/archive/will-federal-regulators-crack-down-oil-speculation/)** > > The biggest threat to economic recovery—and to President Obama's shot at re-election—is the price of gas. Why is Wall Street still allowed to aggravate the uncertainty in the market? XT you bring nothing. The volatility in the oil market is due to speculation. here is an article in the Nation asking for some regulation of the market. Oil volatility caused by speculation has serious impacts on the economies of the world. Our oil dependent country suffers the most. The hint is ignored because you have made the statement many times in the past. Perhaps you are beginning to understand. You started long ago with it is just supply and demand. That was your highschool understanding that you defended and in which used your normal vituperation . ---
**Author:** ![FoieGrasIsEvil](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foiegrasisevil/32/16638_2.png) [@FoieGrasIsEvil](https://boards.straightdope.com/u/FoieGrasIsEvil)\ **Post date:** [March 9, 2011, 5:26pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/66 "2011-03-09T17:26:33Z")
Does stored oil ever “go bad” or decay in some meaningful way? If so, does the government sell off or in some other way utilize this oil before that happens? And then they just replace it with “fresher” oil? ---
**Author:** ![levdrakon](https://avatars.discourse-cdn.com/v4/letter/l/49beb7/32.png) [@levdrakon](https://boards.straightdope.com/u/levdrakon)\ **Post date:** [March 9, 2011, 6:07pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/67 "2011-03-09T18:07:36Z")
> [@FoieGrasIsEvil](#): > > Does stored oil ever “go bad” or decay in some meaningful way? If so, does the government sell off or in some other way utilize this oil before that happens? And then they just replace it with “fresher” oil? Stored correctly underground, it lasts millions of years of course. Exposed to the surface, it can be biodegraded by bacteria. Failure of the storage facility and/or contamination from the storage facility has led the DOE to shut down and transfer the oil out of at least one storage facility. I don’t know if the DOE actually _has_ to periodically freshen up the supply, but they do anyway. They regularly “loan it” to private oil companies. We also break into it during bad weather. Katrina used a lot, for instance. I’m not sure I understand people’s reasoning when they say we should keep it for the apocalypse only. We use it all the time. The gov has sold some off just to balance the budget. We’re not in the habit of hoarding it long-term. Oh, and our current storage facilities do have a limited lifespan, so some time this century we’ll be moving it around, yes. ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [March 9, 2011, 6:12pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/68 "2011-03-09T18:12:43Z")
We don’t tap the strategic reserve because we’re not facing a strategic problem with the current oil situation. If the supply problems in the Middle East escalate we’ll tap it at some point. Drilling domestically is irrelevant. Take ANWR. It would take at least five (more like ten) years for any oil to come onstream if we started drilling there tomorrow. And ANWR is at best projected to supply a million barrels a day, falling quite quickly to half a million. We currently use 22 million barrels per day and in five/ten years usage is projected to jump by millions. So no short term help and no long term help. What is really needed is massive investment in alternative energies because oil has basically reached its peak of production, or is plateauing right now. Luckily the price mechanism will supply the needed investement over future years. ---
**Author:** ![LonghornDave](https://avatars.discourse-cdn.com/v4/letter/l/a87d85/32.png) [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)\ **Post date:** [March 10, 2011, 12:28am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/69 "2011-03-10T00:28:09Z")
> [@Dick\_Dastardly](#): > > Drilling domestically is irrelevant. Take ANWR. It would take at least five (more like ten) years for any oil to come onstream if we started drilling there tomorrow. And ANWR is at best projected to supply a million barrels a day, falling quite quickly to half a million. We currently use 22 million barrels per day and in five/ten years usage is projected to jump by millions. So no short term help and no long term help. What is really needed is massive investment in alternative energies because oil has basically reached its peak of production, or is plateauing right now. Luckily the price mechanism will supply the needed investement over future years. We actually use closer to 19.5 million barrels per day. [Link](http://www.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WRPUPUS2&f=4) That also includes more than just crude oil. For example, natural gas liquids like propane are included. Further, projections of U.S. consumption growth have our usage or crude oil relatively stable through 2035. It is primarily other liquid fuels such as biofuels that are expected to grow. Finally, domestic drilling is far from irrelevant. Take a look at the NYMEX vs. Brent crude pricing differential for evidence. The significant production gains in the Bakken, Three Forks, Niobrara, and other areas have resulted in high inventory levels at Cushing causing the benchmark crude price for the U.S. being far below the global crude price when that situation did not exist a year ago. ---
**Author:** ![Sully](https://avatars.discourse-cdn.com/v4/letter/s/48db29/32.png) [@Sully](https://boards.straightdope.com/u/Sully)\ **Post date:** [March 10, 2011, 12:41am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/70 "2011-03-10T00:41:17Z")
Can someone also explain why US gasoline prices are currently reflecting the price of Brent vs. the WTI? ---
**Author:** ![Naxos](https://avatars.discourse-cdn.com/v4/letter/n/50afbb/32.png) [@Naxos](https://boards.straightdope.com/u/Naxos)\ **Post date:** [March 10, 2011, 4:57am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/71 "2011-03-10T04:57:49Z")
> [@Mr.Moto](#): > > Sorry, can’t let you get away with this. What is the overall Democratic voting record on gas taxes. Do most mainstream Democrats advocate gas taxes that high? Gas taxes is a inefficient and inadequate afterthought to the massive and irreversible environmental destruction and economic disaster conservatives have been imposing on the US and much of the rest of the planet with their insane persistence to actively support every and any destruction for profit for at least the the past 60 years. Republicans have been opposing and blocking _ALL_ efforts for a sensible energy policy since the 70’s when the first economists started focusing on the problem of blatant waste on a global scale being a trap that it will be difficult to get out of in the foreseeable future. Gas in the US should be at least $10/gallon… I said $7 so it sounds a bit more reasonable. Driving a horrid gas guzzler that was purchased with the help of Republican tax credits to a fast food drive-thru is costly to everyone, but it’s only because of Republicans that this cost is dumped on the future generations. ---
**Author:** ![Askance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/askance/32/8281_2.png) [@Askance](https://boards.straightdope.com/u/Askance)\ **Post date:** [March 10, 2011, 5:10am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/72 "2011-03-10T05:10:13Z")
> [@Magiver](#): > > There is no good reason not to drill our own resources particularly since we need them in the short run while we transition to more efficient power sources. OTOH there’s no good reason to drill your own resources now either. Why not keep them so they appreciate as prices rise? As a reserve for purposes more vital than driving your SUV to pick up a pizza than you could have walked to get, or cooked yourself? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 10, 2011, 5:22am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/73 "2011-03-10T05:22:00Z")
[QUOTE=Askance] OTOH there’s no good reason to drill your own resources now either [/QUOTE] There are billions of good reasons…the billions of dollars and thousands of jobs it would generate. > [@](#): > > Why not keep them so they appreciate as prices rise? True, but on the other hand with all of the technological innovation going on what if in the next 10 years real alternatives start to erode the price of oil as we transition to something else? It’s possible that the oil in Alaska might not be worth the price to get it out, assuming the technology to replace it starts to materialize in the next 20 years. Remember, it’s not something that can be done tomorrow…there is going to be substantial lead time and capital to get those fields in production. And if we collectively wait, we may not ever get anything out of those fields…no wealth, no jobs, no capital and no taxes. > [@](#): > > As a reserve for purposes more vital than driving your SUV to pick up a pizza than you could have walked to get, or cooked yourself? I assume you are talking about Alaska still, so I’ll just point out that it’s not a reserve…it’s an untapped resource. And the point isn’t to drive our collective SUV’s to pick up pizza we could have ordered for delivery (not many people are going to walk to get their delivery pizza, since it would be cold by the time they got home)…it’s to generate wealth, jobs and tax revenue, at least two of which should appeal to everyone, I should think…even dyed in the wool SDMB liberal types. 😛 -XT ---
**Author:** ![Askance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/askance/32/8281_2.png) [@Askance](https://boards.straightdope.com/u/Askance)\ **Post date:** [March 10, 2011, 5:36am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/74 "2011-03-10T05:36:24Z")
> [@xtisme](#): > > There are billions of good reasons…the billions of dollars and thousands of jobs it would generate. The jobs it would cost in the future are of no concern to you? Why is NOW the exact right time to drain this one-time resource? What about during the 70s oil shock, why wasn’t that the right time? Or the spike in 2007? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [March 10, 2011, 5:38am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/75 "2011-03-10T05:38:33Z")
> [@Sam\_Stone](#): > > And I wish that people who claim others are ignorant of economics would actually spend some time to understand how it works. > > Speculators are a _good thing_. Futures markets are a good thing. They are part of the mechanism that ensures smooth transitions from one product to another as supply changes. They also buy up risk, and that makes markets less risky for everyone else. > > This is how it works: Let’s say there’s instability in the supply of oil. This instability may be temporary, but it may be the start of a general decline in availability. A speculator has to look at all these factors and try to determine what the future price of oil will be. Other speculators are doing the same thing. > > If enough speculators think that oil is going to be in short supply in the future, they start bidding up the futures price. Because oil is a commodity, they are buying an actual quantity of oil on a future date. On that date, they will actually have to take delivery - or sell their contracts at the then-current price to someone else who wants to take delivery. If the price of oil doesn’t go up to the price they thought it would, they take a loss. If it goes up more, they profit. > > This has the effect of pushing up the current price of oil, _which is a good thing_, because it forces everyone to modify their usage based on the best estimate of the supply of oil in the future. It also stimulates production and development of alternatives - all things you want to start as early as possible if the price of oil in the future is in fact going up. > > Without anyone bidding on the futures markets of products, we’d all be caught napping by sudden price changes. We’d be unaware of the fact that certain commodities might run out. There would be no price pressure to force us to conserve and look for alternatives to commodities before we lose access to them. > > Speculation can work the other way, too. If speculators see that demand for a commodity will drop in the future, or supply will increase relative to demand, then they may start selling short, which has the effect of pushing the price down and giving us valuable information about planning for use of that commodity in the future. > > And for their part, the speculators are making a profit by buying and selling _risk_. The good ones (or lucky ones) make a profit, and the others lose money. But their actions protect the rest of us from that risk, and transmit information to the rest of us about the future price of commodities so we can make smarter decisions today. They’re providing a service, and making a profit doing so - just like insurance companies. > > This is not to say that it always works well and that there are never market failures that cause speculation to simply increase short-term volatility. I worry about automated trading algorithms and other mechanisms that may screw us over to some degree from time to time. But in general, speculation about the future and having people put their money on the line to back up their speculation is a good thing. As usual, wrong. They don’t ever buy oil. They just say they will. They never have to actually go and get oil. They never spend a dime on securing it or taking it somewhere. This is all paper work and promises. ---
**Author:** ![Naxos](https://avatars.discourse-cdn.com/v4/letter/n/50afbb/32.png) [@Naxos](https://boards.straightdope.com/u/Naxos)\ **Post date:** [March 10, 2011, 5:48am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/76 "2011-03-10T05:48:45Z")
> [@Sam\_Stone](#): > > Speculators are a _good thing_. I didn’t read the rest. This is like saying that betting on 26 on a roulette table is a _good thing_. Stock exchange gamblers want to think they have some real information they base their gambling on, and that what they do is not just mindless gambling, like gambling sickos do on a black jack table in a casino. Believing this is true is akin to religion - a mental dysfunction. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [March 10, 2011, 5:56am UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/77 "2011-03-10T05:56:27Z")
> [@xtisme](#): > > True, but on the other hand with all of the technological innovation going on what if in the next 10 years real alternatives start to erode the price of oil as we transition to something else? It’s possible that the oil in Alaska might not be worth the price to get it out, assuming the technology to replace it starts to materialize in the next 20 years. Remember, it’s not something that can be done tomorrow…there is going to be substantial lead time and capital to get those fields in production. And if we collectively wait, we may not ever get anything out of those fields…no wealth, no jobs, no capital and no taxes. Any speculation on future events is uncertain. But where do you think the smart money is? On the price of oil rising or falling in the next twenty years? ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [March 10, 2011, 2:19pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/78 "2011-03-10T14:19:26Z")
> [@Naxos](#): > > I didn’t read the rest. > > This is like saying that betting on 26 on a roulette table is a _good thing_. > > Stock exchange gamblers want to think they have some real information they base their gambling on, and that what they do is not just mindless gambling, like gambling sickos do on a black jack table in a casino. > > Believing this is true is akin to religion - a mental dysfunction. It’s basic economics that speculators are a beneficial and integral part of efficient markets. Learning why this is would require you actually be willing to read about it, though. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 10, 2011, 5:07pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/79 "2011-03-10T17:07:41Z")
[QUOTE=Little Nemo] Any speculation on future events is uncertain. But where do you think the smart money is? On the price of oil rising or falling in the next twenty years? [/QUOTE] Rising I would assume. But jobs right now would be good, as would the influx of capital and new tax revenue, and ‘smart money’ can and has been wrong in the past. I admit it’s a toss up, though…begin developing the resource now (and get the jobs and infrastructure), knowing that you will get a decent return on the investment (since by the time the oil fields are developed the price of oil should be as high or higher than today), or wait 10 years, and hope that between then and the development time the price goes up even further…and that the need for the jobs is still as critical then as today. Jobs are always a good and welcome thing, but in a recession like the one we are in they are even more so. [QUOTE=Askance] The jobs it would cost in the future are of no concern to you? [/QUOTE] What jobs would it cost in the future? Also, we’re in a recession NOW…we could use those jobs today and in the years to come. > [@](#): > > Why is NOW the exact right time to drain this one-time resource? Why not? The price of oil is high enough to make the investment worth while. Developing the resource would provide jobs today as well as into the future, when the fields come on stream they will generate large amounts of capital and tax revenue. Why NOT develop it today?? > [@](#): > > What about during the 70s oil shock, why wasn’t that the right time? Because at that time the price of oil didn’t warrant the capital investment using the technology available at that time. I think that the current price of oil is a short term thing, and will eventually fall back when things settle down. However, even when they fall back they aren’t going to fall back to much below $60-70 a barrel…which makes that resource worth billions of dollars in revenue per year. > [@](#): > > Or the spike in 2007? It would have been, if there was political will to do it. Of course, we weren’t in a recession at that time, so there wasn’t any political will to do it then. But if we had, then those fields would be coming on stream fairly soon, and thus generating that money and providing those jobs, which would be a help right now…don’t you think? -XT ---
**Author:** ![levdrakon](https://avatars.discourse-cdn.com/v4/letter/l/49beb7/32.png) [@levdrakon](https://boards.straightdope.com/u/levdrakon)\ **Post date:** [March 10, 2011, 6:06pm UTC](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810/80 "2011-03-10T18:06:48Z")
Don’t alternative energy industries create more jobs - now - than conventional energy industries? Aren’t we talking a few more jobs in the Alaska wilderness, vs. a lot more jobs spread out all over the US? I’m sure it’s not that simple. We’d have to argue over which industry is more subsidized and whether that’s better or worse in the long term. Still, when it comes to jobs-right-now, isn’t alternative energy better than ANWR? [Previous page](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810.md?page=3) [Next page](https://boards.straightdope.com/t/why-dont-we-tap-the-strategic-petroleum-reserve/573810.md?page=5)