The primary purpose of the oil reserve is to prevent any other country from using an oil embargo against the United States not to control oil prices.
We built a rather nice pipeline in Alaska to a very productive oil field and then declared a chunk of it off limits. Seems like a reasonable oil reserve to tap into since the resources to service it are already there.
I’m not sure what you mean. Loaning oil to oil companies that are running short for whatever reason is mostly what the DOE does with the SPR. They get extra oil back as interest.
At any rate, the administration has stated that gas prices alone is not why they are considering using the SPR. They’re also considering the stability of ME supplies. With good reason, don’t you think? Maybe things are going okay now, but it wouldn’t be a bad idea to conduct a test sale right now. We haven’t actually done that very many times.
Supply and demand. I love it when people say something that ignorant, Libya is less than 2 percent of the oil in the world. There are tons of speculators guessing about the future price of oil. It is a commodities market gambling venture. It is gambling by the rich .
The Saudis claim that the price is over 30 percent over supply and demand level because of speculation.
I love it when people point at someone elses supposed ignorance when failing to understand the basic difference between ‘production’ and ‘reserve’. Or how throwing off production changes the short term equation of supply and demand. It’s really pretty amusing, in an ironic sort of way…
-XT
If a speculator makes $1 million in the oil futures market, another speculator loses $1 million.
It’s not going anywhere, unless you know something about geology I don’t.
By the time you got those fields into production the current problems would be long over with. I think that those fields should be opened up, sure, but not because of this. It’s wealth and capital that the US could use, and more jobs for the folks working those fields and supporting the crews…but it’s not going to make any sort of dent in our dependence on foreign oil, nor any sort of dent in the short term production issues currently happening.
-XT
I always figured oil reserves were for our military. Without it defeating America would be as easy as denying us oil. Far fetched now, perhaps. Still, it seems foolish to deplete it just because your nips are gettin’ cold in a thin t-shirt and boxers.
Bull. They out a bid in at what they think the price they think it will be in the future. As the price climbs. more and more investors get on the bandwagon. it becomes a self fullfilling. The prices climb far beyond the supply and demand levels. If all bids plus bids were countered by negative bids, the price would stay the same.
It’s in case of a major disruption in supply so that the nation can still function. The oil could be used for transport of goods and materials in the short term, for instance, or for emergency vehicles, police, fire and rescue and other vital services. Also, as you say, for the military, though I’d guess that most of it would be used to make sure everyone has food and supplies and that public services stay functional through a major disaster and disruption of our oil supply, at least for a while. You are right…it would be hugely stupid to use it just because the price of gas or heating oil in the US has gone up with a short term spike (while staying way lower than, say, the price of both in Europe).
-XT
So, speculators never lose money??? Seriously? THAT is your actual view? Have you ever invested in a commodity in your life?
-XT
The oil companies don’t want us to. They were pissed when Dubya did it, and they’d be pissed if/when Obama does it.
I don’t know about you, but I’m militantly indifferent to the wants or desires of the ‘oil companies’. It would be a bad idea, and if they don’t want us to do it, well, even a broken clock can be right twice a day. Personally, I hope the price of oil stays high for a while, since ISTM that this is about the only thing that’s going to really get people thinking about alternatives. It’s going to be whinny little Americans, moaning about how we have to pay $4/gallon for gas that are going to start demanding more alternatives in the market place…and there are plenty out there if people will start buying them.
-XT
First, because gas should be at least $7/gallon in the US. It has been too cheap because of Republican politics for far too long.
Second, if the US taps the SPR it will be a signal to global gamblers (see: stock exchanges) that there maybe a crisis coming, which will result in even more panic and higher betting and higher price at the US pumps.
A “strategic” reserve means “a reserve that will be tapped if the stress is enough to pose an actual threat to the government.” In other words, it doesn’t make sense to tap that unless people are threatening to riot in the streets. And before that, they are going to learn to wear sweaters and build smaller, more heatable living spaces. We are nowhere near the breaking- or even stress- point.
If the price of oil is so difficult, why don’t you consider what you can do to make your oil consumption more manageable. People look at me like I’m a freak for not driving a car, but the price of gas has never affected me directly and won’t in the future. Whose the freak now?
You don’t understand how futures markets work. For every person that buys an oil contract, there is a seller. Every tick up in the price of oil the buyer makes money and the short seller loses. Futures markets are zero sum.
Part of the idea behind strategic oil reserve is we want it around for actual strategic purposes. The US military is one of the largest oil users in the world(I think the largest) every tank jeep they drive and every plane they fly requires fuel. We can not fight a war or defend our nation without the oil to keep our military moving. Having oil in our strategic reserve has immense military strategic importance.
If we decide to tap our reserves whenever people feel paying to much for gas is an emergency, eventually we’ll find ourselves without fuel for when we actually need it.
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?
What pray tell is any of the other big producers - who according to reports are producing at 100% of operational capacity - supposed to say?