4 ms·

Why don't we just take delivery of futures contracts directly? Isn't this a great time to fill the reserve?

by firebird84 6y ago

glofish 6y ago
it is and we do.
ineedasername 6y ago
Already being done, and that space too is running out.
burfog 6y ago
Pelosi blocked that. The workaround is to cheaply rent out the reserve as storage space, with the hope that someday a better congress will allow purchasing the oil.
- joecool1029 6y ago
  >Pelosi blocked that. Why should the American people pay to fill it when they can now be paid instead to store the oil? The market's decided that the toxic asset needs to go somewhere and the speculators that bought it (not the producers) will pay. >The workaround is to cheaply rent out the reserve as storage space Cheaply? They took a risk in speculating and it didn't work out. The solution is to give them a choice: surrender their oil to the USG (to avoid paying storage fees) or pay the USG for the service of storing it. No bailouts, fuck that.
  - koheripbal 6y ago
    Bailout? It's not a bailout. Prices were negative! We'd literally be _getting paid_ to take oil and put it into our reserve. It's literally the easiest financial decision on the planet. The fact that Pelosi blocked it demonstrates a fundamental lack of understanding of basic finance.
  - Talanes 6y ago
    I can understand the impulse, and absent any middlemen it would make perfect sense to have the government step in to buy excess production during a crisis to fill national reserves. But we have speculators who sold us the idea that their profits brought stability to the market, so make them keep playing by their own rules.
- hirsin 6y ago
  Hm, I can't find any sources to this effect. Have one? I vaguely recall a bit about paying over market for petroleum to refill the reserve, with the idea being we fill a demand and prop up the gas industry.
  - selimthegrim 6y ago
    McConnell proposed it in the coronavirus stimulus bill but it wasn't in Pelosi's version.
    - deleted 6y ago
      [deleted]
- selimthegrim 6y ago
  So frackers have to deleverage all by themselves? Cry me a (unpolluted) river.
state_less 6y ago
The USG can top off the reserve at any time and it'd be chump change. They're spending trillions of dollars these days. They're not concerned with a few billion dollars worth of oil here and there.
- koheripbal 6y ago
  With negative prices, it's literally the dumbest financial decision not to take the oil - whatever the quantity we're talking about.
vkou 6y ago
The reserve is already 90% full.
- koheripbal 6y ago
  10% of the capacity at what was NEGATIVE $30 per barrel is still a lot of extra money for doing literally nothing. Anyone not filling any available storage is a huge idiot.
- phobar 6y ago
  I am curious, dohappen to have a source for that statement?
  - vkou 6y ago
    Capacity of 717 million barrels. [1] Inventory of 635 million barrels. [2] 635/717 = 88.5% [1] https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States) https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U... [2] https://www.spr.doe.gov/dir/dir.html https://www.spr.doe.gov/dir/dir.html

Why don't we just take delivery of futures contracts directly? Isn't this a great time to fill the reserve?

glofish 6y ago

it is and we do.

ineedasername 6y ago

Already being done, and that space too is running out.

burfog 6y ago

Pelosi blocked that. The workaround is to cheaply rent out the reserve as storage space, with the hope that someday a better congress will allow purchasing the oil.

joecool1029 6y ago
>Pelosi blocked that. Why should the American people pay to fill it when they can now be paid instead to store the oil? The market's decided that the toxic asset needs to go somewhere and the speculators that bought it (not the producers) will pay. >The workaround is to cheaply rent out the reserve as storage space Cheaply? They took a risk in speculating and it didn't work out. The solution is to give them a choice: surrender their oil to the USG (to avoid paying storage fees) or pay the USG for the service of storing it. No bailouts, fuck that.
- koheripbal 6y ago
  Bailout? It's not a bailout. Prices were negative! We'd literally be _getting paid_ to take oil and put it into our reserve. It's literally the easiest financial decision on the planet. The fact that Pelosi blocked it demonstrates a fundamental lack of understanding of basic finance.
- Talanes 6y ago
  I can understand the impulse, and absent any middlemen it would make perfect sense to have the government step in to buy excess production during a crisis to fill national reserves. But we have speculators who sold us the idea that their profits brought stability to the market, so make them keep playing by their own rules.
hirsin 6y ago
Hm, I can't find any sources to this effect. Have one? I vaguely recall a bit about paying over market for petroleum to refill the reserve, with the idea being we fill a demand and prop up the gas industry.
- selimthegrim 6y ago
  McConnell proposed it in the coronavirus stimulus bill but it wasn't in Pelosi's version.
  - deleted 6y ago
    [deleted]
selimthegrim 6y ago
So frackers have to deleverage all by themselves? Cry me a (unpolluted) river.

state_less 6y ago

The USG can top off the reserve at any time and it'd be chump change. They're spending trillions of dollars these days. They're not concerned with a few billion dollars worth of oil here and there.

koheripbal 6y ago
With negative prices, it's literally the dumbest financial decision not to take the oil - whatever the quantity we're talking about.

vkou 6y ago

The reserve is already 90% full.

koheripbal 6y ago
10% of the capacity at what was NEGATIVE $30 per barrel is still a lot of extra money for doing literally nothing. Anyone not filling any available storage is a huge idiot.
phobar 6y ago
I am curious, dohappen to have a source for that statement?
- vkou 6y ago
  Capacity of 717 million barrels. [1] Inventory of 635 million barrels. [2] 635/717 = 88.5% [1] https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States) https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U... [2] https://www.spr.doe.gov/dir/dir.html https://www.spr.doe.gov/dir/dir.html