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This is the time to fill every strategic petroleum reserve in the world [0] to the top. And then double capacity and fill again. I'm sure there are some uninte

• x__x 7y ago
  What could this mean on a local/consumer level? Is there the potential to have a manufactured shortage?
  • totalZero 7y ago
    No, you wouldn't have a manufactured shortage, because any one of the several entities with a strategic reserve could defect from the others and sell its product when the price increases. Not to mention that investment in production activity would sharply increase if spot price were to rally significantly. On a consumer level, it would just delay the inevitable price decline of oil, heating fuel, diesel, gasoline, resid, and jet fuel, and that delay would be harmful to alternative energy investment and electric car sales. Not to mention it would benefit China, a place where industrial activity has already been rebooted. The economy isn't down because oil prices are down. It's quite the opposite; the oil market is reflecting the economic reality. Prices were declining even prior to the OPEC+ meeting. If it were not for the market already softening, nobody would have been discussing additional production curbs at all. We had a mild winter, so heating fuel demand was low. Industrial production was interrupted, so that hurt demand for residual fuels that give energy to factories and power generation plants, as well as the ships that carry goods across oceans. Diesel was affected for the same reason. Jet fuel demand is down due to the complete standstill of the travel industry. Even bitumen and carbon black should see decreased demand because when people stop commuting and traveling, there is less need to resurface roads and replace tires. Plus, if you're not driving your car, you're not buying much gasoline. Those are massive, natural reasons why demand is down for gasoline, middle distillates, and heavy residues. You can't bring that demand back by simply pumping a few-hundred-million barrels of oil into the ground for storage. The way to induce a manufactured shortage would be by imposing import restrictions or tariffs.
• mushamalizat 7y ago
  Yes, you may have heard before but global warming is something to think long term about it
  • texasbigdata 7y ago
    The strategic reserves are one time and not immense.
    • kube-system 7y ago
      And that oil isn't necessarily burnt.
• colechristensen 7y ago
  Oil is dying. Fossil fuels are dying. Not in a hopeful environmental sense, but in an economic sense. Electric cars are here, not in some far off hopeful environment with a few for rich people and nerds but here. Countries have mandated electric only in the near future. Coal mines are going broke. Renewable energy is often cheaper than fossil fuel energy. This whole price crash is because two countries whose economies rely very heavily on oil profits can't really survive on $50 once they got used to $100 oil. Oil is $22 today because the monopoly was broken with North American oilsands kinds of production and enormous in ground capacity puts a price cap on oil. We're watching two countries fight over the scraps of the oil market. Now this is on the scale of decades, but it's not just far off thinking but near-term risk of oil demand plummeting ... the current world economic shutdown is just a little extra nudge. If we filled and doubled all of those strategic petroleum reserves, there would be serious doubt if they would ever – ever be used. We are in the early stages of exponential growth of batteries replacing fossil fuels. After a generation, internal combustion will seem quaint.
  • modriano 7y ago
    How fast do you think America or the world will transition away from gas cars? Be realistic. Is there any way you see that happening in less than 25 years?
    • colechristensen 7y ago
      Yes, people get new cars rather frequently. 50% of new cars by 2030 easily. With the upcoming generation, driving an ICE car will be a social stigma, and electric a status symbol.
      • mandelbrotwurst 7y ago
        Maybe in San Francisco.
      • RandomBacon 7y ago
        For many people, a new-to-them car, is a used car. As long as used ICE vehicles are cheaper than Elec vehicles, there will be a significant demand.
• siruncledrew 7y ago
  What is the shelf life of oil? Is there a point where not using the stored reserves by a certain year would make it unusable if bought today?
  • kleton 7y ago
    Crude's been sitting in those formations since the dinos. It's not going bad in a couple years. Petrol expires because it is heavily refined, cracked etc for higher octane rating at the cost of shelf-life.
    • adrianN 7y ago
      To be fair, the conditions under ground are very different from the conditions in a tanker.
      • SomewhatLikely 7y ago
        The u.s. strategic reserve is stored in salt mines.
  • AngryData 7y ago
    Unrefined it is basically infinite. If it is refined it varies from months to years, to potentially decades depending on exactly what it is. But worst case, you can always refine it again if it goes bad.
• agrajag 7y ago
  I’m not sure it would be practicing good social distancing to do a ton of construction work to double capacity, but yes, now would be a good time to fill existing reserves. Even oil tankers are getting reserved to store oil for later.
  • totalZero 7y ago
    The petroleum industry is much lighter on manpower-per-unit-profit than most other industries, and the job sites involved tend to allow workers to stay away from society for extended periods of time. Oil tankers that are converted to FPSOs and FSOs are among the most expensive storage available for crude.
  • apexalpha 7y ago
    I don't know. Since the entire country is in lockdown the infrastructure arm of the Dutch government has been fast-tracking all kinds of infrastructure maintenance and upgrades that would usually disrupt traffic.
    • nazgulnarsil 7y ago
      And road crews generally don't need to be super close to work effectively. Brilliant.
      • credit_guy 7y ago
        Not to mention that often times construction workers use respirators as part of their job.
• totalZero 7y ago
  1. The price of oil won't necessarily go up from here. If it goes to $5/bbl, that will make governments look a bit stupid when they filled every storage space available at $15/bbl in the open market. One scenario where price doesn't increase would be if there is destruction of demand for commuting, as people realize they can work from home just fine in the long term. Another would be if auto prices increase due to automakers shutting down production lines. A third would be if vacation travelers are still spooked by residual outbreaks after travel restrictions are lifted. On the production side, we haven't seen the kind of capitulation that would be required to change the who's-who of the market; the fracking industry has yet to go over the precipice and there's no sign of renewed OPEC+ cooperation, so there's no organic reason yet for prices to increase. 2. Strategic reserves are generally in salt domes and other accessible underground formations, so there is actually a cost to filling them and also to pumping them empty. And you can't exactly "double capacity" without buying old wells from corporations. So what you are proposing would actually be a bailout for oil producers. 3. Petroleum reserves are not terribly useful to the economy, aside from two particular cases: war and natural disaster. In war, supply chains get interrupted and fuel demand goes up. In natural disasters, production and storage can be interrupted. Outside of those two things, the ability for frackers and other high-cost producers to come online and sell oil will naturally act as a resistance to skyrocketing fuel prices in times of supply shock. 4. This could be a massive moment for renewable energy; goods transportation costs are very low and many people will be seeking work once the pandemic abates, so the government could establish WPA-style programs to build wind farms, electrical grid improvements, and solar farms -- instead of spending that money on buying fossil fuels in order to pump them back into the ground. Instead of spending money in an attempt to cling to fossil fuels, we could use this moment as an opportunity to pivot. 5. The sooner the price of oil bottoms and a few overextended frackers devalue themselves by selling at a loss in order to generate cash flow, the more likely it is that Saudi Arabia will be satisfied with the results of its price war and will return to the negotiating table to re-establish output curbs. If you try to artificially boost the price by buying crude, all you will end up doing is delaying the natural solution. Low prices solve the problem of low prices, by pushing many market participants out of the supply side and allowing the survivors to push up prices again in an attempt to capture their larger market share at a price point with a favorable profit margin. 6. Strategic petroleum reserves aren't that big, and many of them were already quite full prior to the selloff. Even the US SPR had only enough capacity to absorb all Saudi production for less than two weeks.
• MR4D 7y ago
  Trump wanted that in the stimulus package, but it got tossed out somewhere along the way (I.e. it wasn’t funded). Not sure who took it out, but it seemed like a great opportunity.
• credit_guy 7y ago
  It looks like the current US administration agrees with this line of thinking [1]. [1] https://www.worldoil.com/news/2020/3/13/trump-to-fill-us-strategic-petroleum-reserve-to-the-very-top https://www.worldoil.com/news/2020/3/13/trump-to-fill-us-str...