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America Has Lost Its Oil Buffer
- Thro427895 4y ago
- akgoel 4y agoJoe Biden is one the greatest oil traders of our time. We bought this oil at $30-$40, and are selling at $80-$100 per barrel.
- 29083011397778 4y agoThe excess supply was meant to carry America through supply shocks. You can argue it should have been portioned out slower, but the current high prices seem like the kind of supply shock the strategic oil reserve was meant for.
- throwawaymaths 4y agoI assumed it was meant for strategic (aka military) purposes.
- arrosenberg 4y agoNegative. Military has its own reserves.
- erichocean 4y agoCitation needed. Naval reserves[0] were mostly privatized years ago, and to the best of my knowledge, none of the other branches have ever had them. We have less need for the SPR today because we produce so much, and thus the "supply shocks" it was created to prevent can't really happen anymore—certainly not at the same level as the 1970s. Prior to Biden draining it this year, Congress had already approved dramatically reducing the SPR by 2030. [0] https://www.energy.gov/ceser/naval-petroleum-reserves https://www.energy.gov/ceser/naval-petroleum-reserves
- advisedwang 4y agoThe Energy Policy and Conservation Act [1] which started the SPR says: > SEC. 2. The purposes of this Act are— > (1) to grant specific standby authority to the President, subject to congressional review, to impose rationing, to reduce demand for energy through the implementation of energy conservation plans, and to fulfill obligations of the United States under the international energy program; > (2) to provide for the creation of a Strategic Petroleum Reserve capable of reducing the impact of severe energy supply interruptions ; > (3) to increase the supply of fossil fuels in the United States, through price incentives and production requirements; > (4) to conserve energy supplies through energy conservation programs, and, where necessary, the regulation of certain energy uses; > (5) to provide for improved energy efficiency of motor vehicles, major appliances, and certain other consumer products; > (6) to reduce the demand for petroleum products and natural gas through programs designed to provide greater availability and use of this Nation's abundant coal resources; and > (7) to provide a means for verification of energy data to assure the reliability of energy data So it very much is about ensuring supply and and price stabilization. [1] https://www.govinfo.gov/content/pkg/STATUTE-89/pdf/STATUTE-89-Pg871.pdf https://www.govinfo.gov/content/pkg/STATUTE-89/pdf/STATUTE-8...
- throwawaymaths 4y agoThanks for clarifying. I think it's kind of unfortunate, but there we are.
- Bud 4y agoWhy is it unfortunate? It's a worthwhile and perfectly legitimate use of SPR to even out economic impacts.
- throwawaymaths 4y agoI happen to disagree, because it blunts economic impetus to create sustainable alternative
- michaelwww 4y agoAre you going to peel off the "I did that" Biden stickers from gas pumps now that the price has come down or are you going to let Biden take credit for it?
- thepasswordis 4y agoHas the price come down? It’s still over $5/gallon in CA.
- bushbaba 4y agoUsed to be near 6$ in CA. $5/gallon is roughly where it was pre covid
- thepasswordis 4y agoNonsense: https://www.ktvu.com/news/californias-average-gas-price-rose-to-5-per-gallon https://www.ktvu.com/news/californias-average-gas-price-rose... This is an article talking about how $5/gal was breaking records. It’s still higher than that now.
- squidlogic 4y agoFor those curious, it was between $2.78 - $4.25 according to this site https://www.gasbuddy.com/charts https://www.gasbuddy.com/charts
- themitigating 4y agoIn North Jersey it's down to $3 at some stations which is great.
- Bud 4y agoWe just ended a historic streak in which the price declined every single day for over three months, actually.
- protomyth 4y agoYou might want to go look at the pumps today since the price is now going back up. Look at prices when he took the oath and compare. Putin didn't do it all. Shutting down US production was a huge mistake.
- michaelwww 4y agoI guess 427 million barrels left isn't enough for the oil junkies
- psxdude 4y ago427/600 million barrels. So still plenty left...
- roenxi 4y agohttps://en.wikipedia.org/wiki/File:US_Strategic_Petroleum_Reserve.webp https://en.wikipedia.org/wiki/File:US_Strategic_Petroleum_Re... Note the gradient, rates and the fact that two thirds full is a return to the state of things in the 80s - it is conceivable that it will be empty next year. Although whether it is likely is a political question.
- kesor 4y agoThis image shows the current inventory in the SPR - https://www.spr.doe.gov/dir/images/img2.jpg https://www.spr.doe.gov/dir/images/img2.jpg You can use the Wayback Machine at archive.org to look at how it looked like in the past. For example, https://web.archive.org/web/202201/https://www.spr.doe.gov/dir/images/img2.jpg https://web.archive.org/web/202201/https://www.spr.doe.gov/d... Note that it is mostly Sour oil that is being moved off the SPR. Because that is the more useful type. So you might consider that 200-250mbbl of Sweet oil in the SPR is less-useful and counting the whole 400+mbbls is like counting apples and oranges together and saying you have X amount of fruit.
- Guthur 4y agoYou'll actually find that for most of us it's what gives us the life we have. A subsistence existence is not something i'd be wishing for.
- michaelwww 4y agoI don't know where you're from, but in California we are developing other options California just ran on 100% renewable energy, but fossil fuels aren't fading away yet https://www.npr.org/2022/05/07/1097376890/for-a-brief-moment-calif-fully-powered-itself-with-renewable-energy https://www.npr.org/2022/05/07/1097376890/for-a-brief-moment...
- mercy_dude 4y agoAssuming US can print any value of USD out of thin existence as they have done multiple times in last 20yrs, it doesn’t matter for them whether they later buy in the oil to fill the reserve back at 40$ or 400$. Key issue here is that we are seeing hard assets especially commodities being repriced in USD after a steep cycle. The winner here, as always are gulf countries flushing with cash as they are the real owners of the hard commodity assets. And the losers are developing and emerging market economies with poor FX reserves (as we have seen with Sri Lanka, Argentina etc). Pakistan could save 2.26B rupees since last April by trading oil in rupees instead of dollar [1]. The real monopoly in this world is USD hegemony and it’s once again developing economies who will bail out the monopoly paying steep prices for import. [1] https://adamtooze.substack.com/p/chartbook-153-the-south-asian-polycrisis https://adamtooze.substack.com/p/chartbook-153-the-south-asi...
- fsckboy 4y ago> Assuming US can print any value of USD out of thin existence as they have done multiple times in last 20yrs The US doesn't do that. You're probably confusing the increase in the US debt with money supply. So long as the economy grows (as it has over the last 20 years) then the debt is not a problem
- llanowarelves 4y agoEverything goes up forever until it doesn't. Japan hasn't recovered from highs like 30 years ago. One reason foreign debt may not matter is because when you have the most powerful military in the world, some of the most fertile land (food), natural barriers (defenses), and cultural hegemony (arguably America's real export, and English is like a virus) who is going to make you repay it and how exactly?
- fsckboy 4y ago> who is going to make you repay it and how exactly? people are used to thinking of personal debt which they need to repay. Corporate debt is not repaid, the %age is considered part of the "capital structure" of the company. It's a type of ownership, equity holders own the frothy top of the company, bondholders own the underlying assets at the bottom. As corporate bonds are repaid, new bonds are issued, renewing the debt. The fixed %age interest payments on the debt are a cheap way for the equity holders to increase their profits. Government debt is more in the category of corporate debt, repaying it is not part of the plan, the goal is to move future spending into the present for long term infrastructure projects, etc. And as long as the economy grows so the debt percentage stays manageable, it's not an issue.
- cm2187 4y agoIt's interesting that it went down during covid. I thought they were snapping up cheap oil at that time.
- debacle 4y agoTrump wanted to, Congress stymied him to "stick it" to him.
- pclmulqdq 4y agoHe bought a ton of it too, still, just less than he wanted.
- mullingitover 4y agoSource? I’m finding conflicting information about this claim[1] > …the level of the SPR actually declined while President Trump was in office. [1] https://www.forbes.com/sites/rrapier/2022/04/01/no-former-president-trump-did-not-fill-the-strategic-petroleum-reserve/amp/ https://www.forbes.com/sites/rrapier/2022/04/01/no-former-pr...
- pclmulqdq 4y agoHe didn't fill it, and he sold off a lot more than he bought (particularly around 2018, when oil was near a local max). He started buying in 2020. He wanted to fill it, but ran out of money in that part of the budget before he could, and Congress did not want to raise it. Here's a primary source: https://www.energy.gov/articles/department-energy-executes-direction-president-trump-announces-solicitation-purchase-crude https://www.energy.gov/articles/department-energy-executes-d...
- jhanschoo 4y agoSo how do you know this?
- koolba 4y ago
- petmon 4y agoIt's of note that Trump wanted to reduce the SPR by half. The plan was rebuffed by Congress. https://www.cnbc.com/2017/05/24/trumps-strategic-oil-reserve-sale-sparks-debate.html https://www.cnbc.com/2017/05/24/trumps-strategic-oil-reserve...
- cscurmudgeon 4y agoOk, but what happened after that to get us to this state?
- epistasis 4y agoAn emboldened Russia started a war of conquest, drastically reducing supply. Though honestly there's plenty of effects from the coal market started by China's big moves, so it can't all be places on Russia. And Russia was going to do this at some point, it's been inevitable since their 2014 invasion, and also how their prior invasions and involvements have had almost zero pushback.
- VintageCool 4y agoThe pandemic made oil drilling + refining look like a bad investment, so the industry underinvested in new oil resources. Then Putin cut the oil and gas supplies to the world in an attempt to extort Europe into standing aside and accepting his conquest of Ukraine.
- throwA29B 4y ago>Then Putin cut the oil and gas supplies to the world It was (most of) EU and US that decided to stop buying oil from Russia. Everyone else keep doing it. EU and US can do too, just don't want to.
- yyyk 4y agoIn addition, there was an explicit push by the Biden admin to make drilling less profitable (less permits, increased oil royalties, increased investor reporting requirements, and a PR push). It's not politically useful anymore - even the admin can't continue this while sanctioning Putin for his war of conquest - so people pretend it did not happen.
- julienreszka 4y agoPeople seem to forget the issues that come with storage costs
- pm90 4y ago
- koolba 4y agoThe point of the oil reserves isn’t to nick a couple cents off gas prices shortly before an election, it’s to provide a buffer of raw petroleum in case we go to war and the source pipelines and supply chains get hit. The real waste of resources was the Democrats refusal to allow topping up the strategic oil reserves when the spot price collapsed in 2020. As a country we would have been mote secure for the future and the localized impact could have stabilized prices.
- pm90 4y agoThe oil reserves are not serving the purpose of controlling oil prices. You would need a truly astronomical amount of reserves to control the market, which isn’t exactly the best way to use your nations wealth. Buying more during the dip would not have changed the current situation. Which is why, the only feasible solution to controlling oil prices is to change it demand side. Oil does have legitimate uses for eg military, petrochemicals etc. but most of it is just burned away.
- kangaroozach 4y agoBuying the dip would be a cost effective way of maintaining our insurance policy. Buy low, sell high. We had saved cheap oil for a hurricane and released them for a light drizzle in order to try to cap gas price increases, which have more than doubled from one president to the next.
- stefan_ 4y agoI don't understand - we sold high (>100) and can now buy cheap (~80). What you want is what's happening. What are you screeching about?
- quickthrower2 4y agoLayman here. As I recall that dip was actually negative prices because no on could take delivery. Was there actual spare capacity to store more oil at that time?
- arcticbull 4y agoIf now wasn't the time to use the strategic oil reserve when exactly was? Now that oil is much cheaper it can be re-filled for significantly less than the contents were sold for, netting a large profit while also serving its purpose.
- bushbaba 4y agoThey could also buy oil futures now to refill over time without hugely impacting the current market price
- arcticbull 4y agoThe Odd Lots on this suggested the same thing, using their buying power to sell spot and buy long-dated to straighten out the price curve. [edit] Pretty sure it was this episode. [1] [1] https://podcasts.apple.com/us/podcast/odd-lots/id1056200096?i=1000567389279 https://podcasts.apple.com/us/podcast/odd-lots/id1056200096?...
- Narkov 4y agoI'm not sure the futures market makes sense when this reserve is used for emergency/war purposes.
- fsckboy 4y ago> If now wasn't the time to use the strategic oil reserve when exactly was? the strategic reserve is for times of national defense. As long as it's lowered, we are more vulnerable to expanding threats from Russia and China, with potential disruptions to supply lines. Otherwise, it's good for our oil prices to fluctuate with the market, things cost what they cost. The strategic reserve is so we have ready access to oil at any price; it's not big enough to buffer very much of world market consumption.
- deleted 4y ago[deleted]
- zzzeek 4y ago
- ck2 4y agoEh hard to get worried about it. https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States)#Limitations https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U... If they ever convert all the coast-to-coast tractor trailers out there to hydrogen, all the major city buses to hydrogen, maybe local deliver trucks too, how much petroleum would that save? Can't find an easy answer.
- refurb 4y agoWhat is a major source of hydrogen? Oh yeah, petroleum! https://en.m.wikipedia.org/wiki/Hydrogen_production https://en.m.wikipedia.org/wiki/Hydrogen_production
- ck2 4y agoWhat about those months of non-stop fracking burn-off? Could they require all that to be captured instead and turned into fuel? https://www.npr.org/sections/krulwich/2013/01/16/169511949/a-mysterious-patch-of-light-shows-up-in-the-north-dakota-dark https://www.npr.org/sections/krulwich/2013/01/16/169511949/a... especially considering the burnoff makes people sick many miles away https://www.sciencedirect.com/science/article/abs/pii/S0047272722000032 https://www.sciencedirect.com/science/article/abs/pii/S00472...
- refurb 4y agoSure, but those flares are a tiny fraction of the oil that would be required to power a hydrogen economy.
- julienreszka 4y agoYou can make hydrogen through electrolysis from any source of energy.
- photochemsyn 4y agoDOE has a decent info / FAQ site on the SPI: https://www.energy.gov/ceser/spr-faqs https://www.energy.gov/ceser/spr-faqs It looks like drawdown's been going on at 1 million barrels per day since March, in the name of bringing down gasoline prices. Curiously enough, another approach to doing that - limiting exports - got no traction or interest whatsoever. Here it's important to note that the 1970s-era ban on crude oil exports was lifted cooperatively by Democrats and Republicans in 2015, and the USA is now a net exporter (apparently most imports are crude oil, and most exports are refined products?). For an open-access report on this situation (Sep 7 2022): https://www.forbes.com/sites/rrapier/2022/09/07/the-strategic-petroleum-reserve-is-at-its-lowest-level-since-1984/ https://www.forbes.com/sites/rrapier/2022/09/07/the-strategi... Meanwhile LNG exports to Europe seem to be running at full tilt, and oil major profits have never been higher. Seems like the war is delivering to Wall Street as hoped for (although Russian oil money also seems to be flowing in full-tilt, so?).
- smitty1110 4y agoOne of the key factors of gas prices is refining capacity: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOCLEUS2&f=M https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M... We had a draw down during covid, which included some plants that were near their planned End of Life being decommissioned early.
- neilknowsbest 4y agoAs I understand it, most US refiners in the gulf region are tuned for heavier/sourer crudes than is produced domestically. I'm not entirely sure why that is (maybe a historical artifact due to prevalence of those grades in Latin America?), but the result is that we generally want to import crudes for refining. Which is to say: the light/sweet crudes produced domestically are not the ideal feedstocks for our refiners, so restricting exports of those wouldn't necessarily increase supply of refined products.
- seanmcdirmid 4y agoI think they are tuned for mixing heavy dirty crude from places like Venezuela with light clean crude from Texas. It’s the best way to leverage Venezuelan oil (without mixing in higher quality crude, refining is very difficult). Maybe that’s why they wanted Keystone XL? Since Venezuela is basically out of commission, use Albertan oil instead?
- rmason 4y agoWhat I don't understand is why we're selling oil from the Strategic Reserve to China. I've asked people in the oil business and even they're perplexed. If we're going to sell some to another country why not to one of our European allies? https://www.instituteforenergyresearch.org/international-issues/biden-sells-oil-to-china-from-the-u-s-strategic-petroleum-reserve/ https://www.instituteforenergyresearch.org/international-iss...
- Bud 4y ago
- connicpu 4y agoKoch brother* there's only one left now
- peterpost2 4y ago
- krona 4y agohttps://www.reuters.com/business/energy/oil-us-reserves-head-overseas-gasoline-prices-stay-high-2022-07-05/ https://www.reuters.com/business/energy/oil-us-reserves-head... 950,000 barrels sold directly to Unipec (formally Sinopec): https://www.energy.gov/articles/doe-announces-sales-strategic-petroleum-reserve-combat-putins-price-hike https://www.energy.gov/articles/doe-announces-sales-strategi...
- aaron695 4y ago
- heythere22 4y agohttps://archive.ph/iHxEY https://archive.ph/iHxEY
- kylehotchkiss 4y agoDon’t crude oil and associated products lose their potency over time? So emptying older fuel out of the reserve sometimes is a good thing so we don’t need to stabilize it with whatever the scaled version of Sea Foam is?
- userbinator 4y agoIt's crude oil, not refined. It's been in the ground for millions of years.
- fny 4y agoPlease go look at a price chart. It will tell you volumes more than whatever late stage narrative is being pushed. Wall Street has been shilling "the SPR might go to zero" narrative since January. The SPR was filled to the brim during the COVID crash by the Trump admin. This was at record low (negative!) prices. The SPR was released during this recent price panic by the Biden administration mostly near all time highs $90-120. They plan to refill the SPR at current prices. Crude is now $78. This was an incredibly good trade. We're talking 300-400% price appreciation here. Even if the US government was selling SPR crude to China, they sold it at a massive premium and will buy it back at a lower price. What's even more interesting is that the futures market had predicted this trade existed in the futures market even when oil was trading at $120. Refilling the SPR at a lower price was guaranteed at the time of release. Not a huge fan of this admin overall, but they navigated this crisis far better than I thought they would.
- kchoudhu 4y agoActually, the US government has released oil from the SPR while simultaneously undertaking to buy oil in the future at a given price (i.e. engaged in the futures market) in an effort to control the oil futures term structure. This not only helps ease current supply issues but also works to stabilize future production by giving producers some modicum of relief from boom/bust nature of industry. The government is getting smarter: financialization can on occasion actually be extremely useful.
- kangaroozach 4y agoThen why don’t they articulate this to us? Seems more like they are finding any way possible to mask the economic pain we are facing. Print money, fire-sale our assets, borrow more. Anything to push out the day of reckoning and ensure that the music stops under someone else’s watch.
- ncallaway 4y agoHow is selling oil at a high point a “fire sale”? Isn’t a fire sale usually selling at a… low price?
- Spooky23 4y agoSo would your preferred solution be to endure maximum pain now? Even the Trump team, to their credit, understood that the economy imploding due to the COVID actions was a bad thing - so they rushed capital into the market to keep things moving. That caused inflation, but inflation is a better outcome than the alternative. We don’t live in a video game, and there’s no cheat code to make problems go poof.
- nl 4y agoYeah I don't get what the parent comment is proposing. People say this or that will happen in the long term, but there are so many impossible to predict variables that the best you can really do is try to keep the economy robust enough to absorb shocks. Economy slowing because of COVID? Deal with that. Inflation happening because of constrained supply chains? Use the oil reserve to reduce the price. These are pretty reasonable policies that both side of politics would do when in power because they make sense.
- anovikov 4y agoWhy would U.S. need this storage at all today when it is energy independent and is a net exporter of all main kinds of fossil fuels? This is a legacy of Nixon era when U.S. depended on Middle Eastern imports that could be cut off anytime.
- neximo64 4y agoCounterpoint, since the US is now amongst the world's largest exporters of oil. Is a strategic reserve important? Wouldn't a more prudent action in time of need be to redirect exports to the needs of war? Would it be weird for Saudi Arabia to have a strategic reserve?
- TheMightyLlama 4y agoAmerica has _spent_ its oil buffer. It’s important to note the difference between a intentional use of an asset vs an unintentional loss of an asset.
- smitty1e 4y agoIf a legal voter, register your feedback on 08Nov.
- ransom1538 4y agoroger
- tomohawk 4y ago
- patrickthebold 4y agoThat number seems high. Do you have a source or was it made up?
- jackmott42 4y agoIt is a survey by https://mclaughlinonline.com/ https://mclaughlinonline.com/ They are clearly hyper partisan, but being charitable that should be fine, we just need to see what exactly the survey methodology is, I can't find it. Wonder why. Or its just obviously nonsense and we can ignore the crazy person?
- rjzzleep 4y agoIt's a pointless strawman anyway. He's clearly not the one making the decisions, so it doesn't matter if he's sane or not. A big chunk of his cabinet is equal to Obama's as well. And before you come in with "but Trump did X". Yes, Trump was an idiot as well. Different people can be morons at the same time.
- metacritic12 4y agoThe SPR is down, yes. But just want to point out the WSJ definitely has an axe to grind in this. They're anti-Biden and want highlight how terrible this all is because it's being done by Biden. As another poster pointed out, he Russell conjugates and uses the word "Lost" versus "Spent" (fighting inflation). The chart in the graph has an axis that starts at a non-zero level, the first trick in statistical persuasion. The article catastrophizes by saying things like "for the first time it's lower than commercial stockpiles". Wait why is commercial stockpiles even the relevant reference level? Shouldn't there be some first-principles analysis of what is even necessary? Is the "safe" SPR level way lower for the USA today because the USA is a net exporter? None of that analysis.
- askvictor 4y agoHmmm; is that the same strategic oil reserve that Australia struck an agreement[1] to supposedly have access to? I guess we'll have access to it when no-one needs it, but when the pinch comes... [1] https://www.minister.industry.gov.au/ministers/taylor/media-releases/australia-boost-fuel-security-and-establish-national-oil-reserve https://www.minister.industry.gov.au/ministers/taylor/media-...
- jaycar 4y agoI have similar concerns - but am partially reassured by this press release: "...Australia to lease space in the U.S. Strategic Petroleum Reserve (SPR) to store and access Australian owned oil..." - https://www.energy.gov/articles/us-and-australia-strengthen-fuel-security-new-spr-arrangement https://www.energy.gov/articles/us-and-australia-strengthen-...
- klandy 4y agoI think the current sanctions against Russia are misguided. Yes, we want to support Ukraine, and certainly we should not export weapons or semiconductors. But I can't follow the argument that petrodollars would help Russia that much. Before and since the 2014 annexation of Crimea, Russia has exported oil/gas without restrictions. Yet it has been unable to build up an army that can proceed much more than 50 km in Ukraine. IOW, the petrodollars have not helped at all. Now we are buying LNG via China and ship it to Europe using polluting ships. We are destroying our economies for no reason. Use targeted sanctions and let the elites in Russia embezzle the petrodollars and buy stuff that can't be used in the war (Ferraris etc.).
- croes 4y agoIt's about sending a message. Otherwise Putin wouldn't see any consequences. Now he realizes we will react even if it hurts ourselves.
- Bhurn00985 4y ago> We are destroying our economies for no reason. I would say trying to avoid further destruction of Ukraine and its people is a very good reason. Kindly re-calibrate your moral compass.
- bigtex88 4y agoThat would assume that people like them have a moral compass to begin with.
- nxmnxm99 4y agoLol moral compass. How much of our economy are we expending to protect Palestinians? Or rebuild Iraq after we massacred one of human histories most storied civilizations for no reason? Where are the morality reparations? Americans invoking morality in their entirely political defence of Ukraine is such a joke.
- MrBuddyCasino 4y agoIts very misguided. Why „U.S. and European attempts to use economic sanctions to cut off Russian oil from the global market was a catastrophic error“: https://nymag.com/intelligencer/2022/09/europe-energy-catastrophe.html https://nymag.com/intelligencer/2022/09/europe-energy-catast...
- ak_111 4y agoWhat are the chances that this is a 4D chess move, where the US government is confident we are heading into an almighty recession soon (because they basically know from their contacts at the Fed that they will not stop hiking interest rate hikes for a while), and so is dumping its oil at a high price from which they intend to refill again in the midst of the recession when it is selling at a discount? This might also explain why they are intentionally selling it to China. Beware of Greeks bearing gifts.
- yellow_lead 4y agoI think the point of the oil reserve is to actually hold a reserve of oil - not to exploit it for minor gains on the US' massive balance sheet
- ak_111 4y agoI agree, but I am trying to give them the benefit of the doubt here that they are not just stupid or political opportunist with the country's national wealth. So I am offering a reason why they might sell it for some 'smart' reason rather than just political gains prior to mid-election. Also you can argue that the amount of reserve to hold should always be a function of how much you are forecasting future demand, so if you know with high level of certainty future demand will crash due to a recession, it might be sensible to reduce reserve.
- OrangeMonkey 4y agoYou give people - you and me - the benefit of the doubt. Governments deserve no such act of kindness.
- ngetchell 4y agoAnd Governments are filled with people.
- unyttigfjelltol 4y agoEmbargoes and import bans cause recessions too, and they are precisely what the SPR was meant to address. The US needs a multi-tier solution, short medium and long term. Recession only is a medium-term solution and not even the best. SPR is supposed to be the bridge to get you there and save you from worse. Perhaps a better solution would be a reserve of mothballed energy projects and equipment that can be spun up on 6 months notice or a year, not that in this political environment it would have helped.
- lightlyused 4y agoThey say that 427 million barrels is the lowest since 1984. I don't see that based on their graph. This article is nothing but FUD.
- anonu 4y agoSo USA uses 20m barrels per day and the SPR holds 700m at it's peak, or just over a month of reserves. On the other hand barrel production has tripled to 15m barrels per day from 20 years ago. The headline is a bit sensationalist...
- hankchinaski 4y agosell high buy low
- WealthVsSurvive 4y agoHave we tried nationalizing coal, oil, and gas, and having a democracy so we don't get any more local coups from the financial hegemonic masters of said resources?
- rs999gti 4y agoVenezuela would like to talk to you about their successful nationalization of private industries
- WealthVsSurvive 4y agoI said democratic, so yes, Venezuela. Seems like the #1 undisputed world's largest oil reserve country would do absolutely fine, if they weren't actively under NATO embargo, using military force to prevent trade in their entire global hemisphere, so gullible Americans can't spout nonsense like this and form political identities from it.
- robomartin 4y agoHere's something nobody talks about (probably because this is a rule I came-up with after analyzing relevant factors): Our ability to rapidly expand renewable and nuclear energy generation is inversely proportional to the cost of oil. For the mathematically-challenged this mean: If oil is expensive we cannot afford to expand renewable or nuclear energy production fast enough to meet stated goals. Why? Because everything related to the manufacturing, transportation, construction, operation and maintenance of these power plant has the cost of oil as one of the important cost-driving variables. Normally people think "fuel" when they read "oil". Making this assumption would be very wrong. Yes, of course, the millions of trucks and cars needed to engage in construction projects at a national scale are all powered by gasoline or diesel. That is a major cost-driver, no doubt about that. However, there are untold numbers of oil derivative products --from lubricants to plastics-- that also come into the equation. This is where things turn weird and a second rule is necessary: In order to be able to support rapid transition to renewable energy sources and electric vehicles we have to support and demand ultra-low oil prices. At current oil prices, the US and Europe simply do not have enough money to fully electrify their entire transportation infrastructure. It is hard to run the numbers on something like this due to the element of time and complex geopolitical forces. My ROM (Rough Order of Magnitude) estimate is that the US would have to at least double it's foreign debt in order to be able to build the infrastructure required to be able to support 300 million electric cars (full electrification). We have to double our power generation capacity and also more than double our ability to transport it (the "grid"). That isn't trivial. We can barely get a high speed train built in California after a hundred billion dollars and now we are talking about doubling the entire power-generation infrastructure for the entire country. This is what is lost in conversations and politics that are ideologically-driven to such extremes that we end-up not being able to move forward. The third rule would be: We have to have a plan and solid execution. The above makes no sense unless we have a solid plan and execute better than our dismal record for the last several decades. I refer, one more time, to the ridiculous high speed train project in California. Such performance should result in people losing their jobs and maybe even some suffering legal consequences. Yet, that never seems to happen. If that's the best we can to, forget about it. We can't build anything at scale any more. Just look at how many problems Tesla is having just to build battery factories in the US and Germany as an example. Now multiply that by, I don't know, a million, to get a sense of how much better we have to be about these things. To simplify: We need a solid 25-year plan to migrate to renewables and nuclear at scale. Specific project with specific timelines and realistic objectives. During that time, we need super-cheap fuel and derivative products in order to be able to pay for the migration. More importantly, we need to develop and enforce a culture of solid execution, without which we might as well give up. In my opinion, without this the dream of migration to a clean electric-powered future within our lifetimes is a fantasy. Oh yeah, last rule: No, solar alone can't do it. We need nuclear. Lots of it.
- dragontamer 4y agoSeems like a pretty strong headline for saying "USA still has 400 million barrels in its strategic oil supply". We had 600-million before the Russia-Ukrainian war, and we have 400-million now. That's a big drop, but this isn't "lost" by any stretch of the imagination.
- fny 4y agoAlso it was guaranteed be refilled at a lower price since May when they bought oil futures against the anticipated sale. Here's the May 2022 repurchase announcement: https://www.energy.gov/articles/doe-announces-long-term-buyback-plan-ensuring-continued-availability-strategic-petroleum https://www.energy.gov/articles/doe-announces-long-term-buyb... > The Fall 2022 call for bids to purchase 60 million barrels will specify the volume and type of crude oil that SPR will purchase. The future delivery window will be based on anticipated market conditions factoring in when future oil prices and demand are expected to be significantly lower, likely after FY 2023. In addition to securing contracts for future delivery to refill the SPR, this replenishment structure also will help encourage the production we need now to lower prices this year by guaranteeing this demand in the future at a time when market participants anticipate crude oil prices to be significantly lower than they are today. So the DOE has traded the 2022-2023 spread in the futures market and made a killing. Anyone who's talking about misuse for political gain doesn't seem to appreciate that the refill has been guaranteed since this whole thing started. This was extremely prudent use of the SPR. Also, they sold oil to China at massive premium. For the record, I am not a Biden fan, and I'm currently flat on an oil trade precisely because I thought they'd screw this up.