11 ms·

$3B was allocated to precisely this purpose in the stimulus proposal before it passed, but it was later dropped over opposition: https://www.washingtonexaminer

by arbuge 7y ago

$3B was allocated to precisely this purpose in the stimulus proposal before it passed, but it was later dropped over opposition: https://www.washingtonexaminer.com/policy/energy/bailout-for-big-oil-democrats-eliminate-3b-strategic-petroleum-reserve-purchase-in-pandemic-relief-package https://www.washingtonexaminer.com/policy/energy/bailout-for... I agree with your assessment and this was a serious mistake in my opinion. There is now however an alternative plan to monetize the remaining open space by leasing it to oil companies that need storage space: https://www.reuters.com/article/us-global-oil-usa-reserve/us-to-lease-space-for-initial-30-million-barrels-of-oil-in-emergency-reserve-idUSKBN21K33E https://www.reuters.com/article/us-global-oil-usa-reserve/us... Storage space is in very high demand at this point - to the extent that oil tankers are being used as floating storage: https://www.bloomberg.com/news/articles/2020-04-04/the-most-profitable-trade-oil-all-over-the-oceans-right-now https://www.bloomberg.com/news/articles/2020-04-04/the-most-...

echelon 7y ago
> it was later dropped over opposition Both parties make mistakes. Sigh. Why on earth did they frame this as a "bailout for big oil"? It's a strategic concern for national security.
- rstupek 7y ago
  Because anytime you can re-frame whatever your opponent is doing into something negative you win more political points with your base.
- reportingsjr 7y ago
  > Why on earth did they frame this as a "bailout for big oil"? Because that is exactly what it is. You're talking about the largest companies in the world, they've have decades and decades of war and subsidy supporting them. They don't need more support now, especially considering the environmental destruction they cause. Now is a much better time to push forward higher quality energy production technology like solar, wind, batteries, etc.
  - leetcrew 7y ago
    why would now, while we're in the midst of a public health crisis and the ensuing economic turmoil, be a good time to radically change our energy infrastructure to something that still has a higher unit cost? I can obviously see that, politically, now is a good opportunity to push agendas that would otherwise not be accepted, but does that really make it a good time overall?
    - makomk 7y ago
      It's not a good time at all. Even if you put the cost and reliability problems aside for a moment, the entire planet's supply chains are massively disrupted and largely shut down. Plus, even if you could get the equipment manufactured, installing it is a health hazard right now - it means lots of people from all over the place in close quarters on sites with poor access to sanitation facilities. This will set back green energy a year at the very minimum.
    - reportingsjr 7y ago
      Lower pollution energies only have a higher unit cost due to insane subsidies that oil/gas/coal receive. Now is a great time to ramp up cleaner technologies since people are going to be looking for jobs anyways once this ends. Much better to advance technology when we are fixing our economy versus propping up old, unhealthy means.
  - A4ET8a8uTh0 7y ago
    Yes. But just like various items in demand now ( ventilators, masks and so on ), it is not a bad idea to have a strategic reserve of those for those times when they would be necessary. I am a alternative energy proponent, but it seems misguided to simply ignore current situation and not take steps beneficial to the taxpayer ( buy stuff while it is cheap ). The other side of the argument appears to want to cause maximum amount of pain to force people to move to the other sources. I understand that argument. I do not really buy it. National stockpile should not be subject to that. It serves a strategic purpose. edit: added not before take
    - 7y ago
- godtoldmetodoit 7y ago
  It's really not though. Back when the US was a oil importer yes, but under normal market conditions we are the largest exporter in the world. The shale guys can basically flip a switch and go from 0 to millions of BPD. So we are really just paying to move oil from one rock formation to another...
  - kube-system 7y ago
    Right now we can, yes. There's nothing that guarantees that will continue to be the case in the future. If we could accurately predict future changes in market conditions, nobody would ever need stockpiles. If anything, the writing is on the wall for American oil production. The current low prices are mainly a manufactured attempt to bankrupt oil producers with higher overhead costs.
    - BurningFrog 7y ago
      The ability to start pumping the oil in American soil is not dependent on market conditions. The shale oil in the ground is a perfectly good stockpile as is. Or so it seems to this perhaps overconfident computer guy with little relevant expertise...
      - nordsieck 7y ago
        > The shale oil in the ground is a perfectly good stockpile as is. I think the point people are trying to make is that it's quite a bit less expensive to buy crude and store it right now than to extract it from shale in the future.
        BurningFrog 7y ago
        Sure, but you have to weigh in the probability that such a strategic stockpile will ever be used. As an economic investment, it may well be a real good idea to buy up cheap oil now. But that's separate from the stockpile argument.
- ip26 7y ago
  Why on earth did anyone frame 2008 as a "bailout for big banks"? It was a strategic concern for national security. It can be both at the same time.
valuearb 7y ago
It shouldn’t be filled because it’s useless and nothing but a political pork barrel. It will never be emptied during an emergency because politicians won’t agree on it. We have emergency supplies, they are in the ground or in shale. The US is the largest producer of oil, low prices means more of it stays in the ground waiting for higher prices.
- deleted 7y ago
  [deleted]
- angry_octet 7y ago
  While it is not necessary to have more than a cache because of domestic shale oil, forcing an average price would be good because the market is too volatile to support large investment. It is critical to understand that shale/tar sands oil is very expensive in terms of fugitive emissions, far more than traditional deep wells. An emissions tax is needed to capture this externalized cost. A more stable oil price and greenhouse emissions taxation would encourage better fracking engineering to reduce emissions, as well as reducing pointless consumption.
  - valuearb 7y ago
    That’s ridiculous, that volatile market has supported trillions in investment over the years. The market knows better than politicians and right now it’s keeping our massive supplies of oil in the ground until they are more valuable.
    - angry_octet 7y ago
      The value of bonds for shale oil companies supports my argument and refutes yours.
      - valuearb 7y ago
        No it proves my argument,e by e market works. No one should be investing in shale oil right now. And when we need shale oil, it will be there waiting.
beerandt 7y ago
Even without direct funding from Congress, the executive branch has pretty wide discretion for filling the reserve, mostly by accepting royalties-in-kind from producers on Federal land or offshore. Basically, they can accept oil into the reserve instead of cash payments owed. There's also quite a bit of leeway for borrowing and lending oil as needed, as well as ways to lease unused storage capacity. And the overall capacity is rate limited such that it takes almost half a year to fill/drain accessible reserves, so it's not like we could just purchases $3 billion in oil tomorrow and instantly put it there. It might store 35-40 days of US needs, but it takes 140-180 days to fill and/or access it. Which makes royalty based purchasing over time align more with ability to accept delivery. So just because Congress removed that $3 billion, doesn't mean it's not getting filled.

by arbuge 7y ago

echelon 7y ago

> it was later dropped over opposition Both parties make mistakes. Sigh. Why on earth did they frame this as a "bailout for big oil"? It's a strategic concern for national security.

rstupek 7y ago
Because anytime you can re-frame whatever your opponent is doing into something negative you win more political points with your base.
reportingsjr 7y ago
> Why on earth did they frame this as a "bailout for big oil"? Because that is exactly what it is. You're talking about the largest companies in the world, they've have decades and decades of war and subsidy supporting them. They don't need more support now, especially considering the environmental destruction they cause. Now is a much better time to push forward higher quality energy production technology like solar, wind, batteries, etc.
- leetcrew 7y ago
  why would now, while we're in the midst of a public health crisis and the ensuing economic turmoil, be a good time to radically change our energy infrastructure to something that still has a higher unit cost? I can obviously see that, politically, now is a good opportunity to push agendas that would otherwise not be accepted, but does that really make it a good time overall?
  - makomk 7y ago
    It's not a good time at all. Even if you put the cost and reliability problems aside for a moment, the entire planet's supply chains are massively disrupted and largely shut down. Plus, even if you could get the equipment manufactured, installing it is a health hazard right now - it means lots of people from all over the place in close quarters on sites with poor access to sanitation facilities. This will set back green energy a year at the very minimum.
  - reportingsjr 7y ago
    Lower pollution energies only have a higher unit cost due to insane subsidies that oil/gas/coal receive. Now is a great time to ramp up cleaner technologies since people are going to be looking for jobs anyways once this ends. Much better to advance technology when we are fixing our economy versus propping up old, unhealthy means.
- A4ET8a8uTh0 7y ago
  Yes. But just like various items in demand now ( ventilators, masks and so on ), it is not a bad idea to have a strategic reserve of those for those times when they would be necessary. I am a alternative energy proponent, but it seems misguided to simply ignore current situation and not take steps beneficial to the taxpayer ( buy stuff while it is cheap ). The other side of the argument appears to want to cause maximum amount of pain to force people to move to the other sources. I understand that argument. I do not really buy it. National stockpile should not be subject to that. It serves a strategic purpose. edit: added not before take
  - 7y ago
godtoldmetodoit 7y ago
It's really not though. Back when the US was a oil importer yes, but under normal market conditions we are the largest exporter in the world. The shale guys can basically flip a switch and go from 0 to millions of BPD. So we are really just paying to move oil from one rock formation to another...
- kube-system 7y ago
  Right now we can, yes. There's nothing that guarantees that will continue to be the case in the future. If we could accurately predict future changes in market conditions, nobody would ever need stockpiles. If anything, the writing is on the wall for American oil production. The current low prices are mainly a manufactured attempt to bankrupt oil producers with higher overhead costs.
  - BurningFrog 7y ago
    The ability to start pumping the oil in American soil is not dependent on market conditions. The shale oil in the ground is a perfectly good stockpile as is. Or so it seems to this perhaps overconfident computer guy with little relevant expertise...
    - nordsieck 7y ago
      > The shale oil in the ground is a perfectly good stockpile as is. I think the point people are trying to make is that it's quite a bit less expensive to buy crude and store it right now than to extract it from shale in the future.
      - BurningFrog 7y ago
        Sure, but you have to weigh in the probability that such a strategic stockpile will ever be used. As an economic investment, it may well be a real good idea to buy up cheap oil now. But that's separate from the stockpile argument.
ip26 7y ago
Why on earth did anyone frame 2008 as a "bailout for big banks"? It was a strategic concern for national security. It can be both at the same time.

valuearb 7y ago

It shouldn’t be filled because it’s useless and nothing but a political pork barrel. It will never be emptied during an emergency because politicians won’t agree on it. We have emergency supplies, they are in the ground or in shale. The US is the largest producer of oil, low prices means more of it stays in the ground waiting for higher prices.

deleted 7y ago
[deleted]
angry_octet 7y ago
While it is not necessary to have more than a cache because of domestic shale oil, forcing an average price would be good because the market is too volatile to support large investment. It is critical to understand that shale/tar sands oil is very expensive in terms of fugitive emissions, far more than traditional deep wells. An emissions tax is needed to capture this externalized cost. A more stable oil price and greenhouse emissions taxation would encourage better fracking engineering to reduce emissions, as well as reducing pointless consumption.
- valuearb 7y ago
  That’s ridiculous, that volatile market has supported trillions in investment over the years. The market knows better than politicians and right now it’s keeping our massive supplies of oil in the ground until they are more valuable.
  - angry_octet 7y ago
    The value of bonds for shale oil companies supports my argument and refutes yours.
    - valuearb 7y ago
      No it proves my argument,e by e market works. No one should be investing in shale oil right now. And when we need shale oil, it will be there waiting.

beerandt 7y ago

Even without direct funding from Congress, the executive branch has pretty wide discretion for filling the reserve, mostly by accepting royalties-in-kind from producers on Federal land or offshore. Basically, they can accept oil into the reserve instead of cash payments owed. There's also quite a bit of leeway for borrowing and lending oil as needed, as well as ways to lease unused storage capacity. And the overall capacity is rate limited such that it takes almost half a year to fill/drain accessible reserves, so it's not like we could just purchases $3 billion in oil tomorrow and instantly put it there. It might store 35-40 days of US needs, but it takes 140-180 days to fill and/or access it. Which makes royalty based purchasing over time align more with ability to accept delivery. So just because Congress removed that $3 billion, doesn't mean it's not getting filled.