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The SPR was set up as an emergency reserve. Not to manipulate the market price, which is only a temporary reprieve anyway. As soon as its exhausted and the sup

by starkd 4y ago

The SPR was set up as an emergency reserve. Not to manipulate the market price, which is only a temporary reprieve anyway. As soon as its exhausted and the supply issue is not addressed, we will likely be in the same boat as before without the cushion in case of a true national security emergency.

matthewdgreen 4y ago
The SPR was created during an era when the US was an oil importer, fundamentally dependent on foreign supply. That’s no longer the case, thanks largely to the shale industry. So the national security calculus is completely different: instead the SPR is mainly an economic tool designed to buffer our economy against global price shocks during times of foreign turmoil, which is exactly the use-case it was just put to when Russia invaded Ukraine and global prices spiked. It should be refilled now, absolutely. But it is not a matter of national security anymore.
ozzydave 4y ago
We should guarantee a price to refill the SPR, so US oil companies will continue to invest in US production for the medium term. https://twitter.com/mattyglesias/status/1572896629489041410?s=20&t=69r9Ger1D4kWVSoRuy0Jyw https://twitter.com/mattyglesias/status/1572896629489041410?...
kshacker 4y ago
If done right, I don't see what's wrong with it. A dozen weeks back, oil was 120, now it is less than 80. We should be able to fill it back and make money while doing it. We did the same thing saving GM more than a dozen years back.
jtc331 4y ago
It's worse than that: once we start refilling it we bring back all of the demand that releasing oil from the SPR kicked into the future. It follows that if either 1.) demand drops or 2.) supply increases the refilling will create exactly the same problem in the future that releasing oil from the SPR was supposed to solve.
- sangnoir 4y ago
  > It's worse than that: once we start refilling it we bring back all of the demand that releasing oil from the SPR kicked into the future. Translating this into HNese, your argument suggests that disk drive caching shouldn't work. The answer is you can fill your reserves at a much lower rate than you empty them, taking advantage of many small windows.
- matthewdgreen 4y ago
  It will set a floor on oil prices, keeping them from going as low as they otherwise would have. Some have argued that this is a good thing, since it will help to stabilize the "boom/bust" nature of the industry -- guaranteeing that oil producers continue to invest in expanding supply.
legutierr 4y ago
Is there any meaningful difference between "achieve a lower market price for oil" and "alleviate oil supply shortages"? If the SPR is not intended to alleviate oil supply shortages in a time of war, what else would it be intended for? Think about what has happened in the past nine months. Russia, the country with the most nuclear warheads in the world, invaded its neighbor, where it proceeded to systematically torture and murder unarmed civilians, filling mass graves. Russia simultaneously threatened to invade members of the European Union and the NATO alliance, while threatening to use its nuclear weapons against any country that might dare to assist its victims in defending themselves. In other words, there is a war in Europe, where the aggressor is one of the world's largest energy producers. How is this not the kind of "true national security emergency" (as you put it) that the SPR is intended to address?

by starkd 4y ago

matthewdgreen 4y ago

The SPR was created during an era when the US was an oil importer, fundamentally dependent on foreign supply. That’s no longer the case, thanks largely to the shale industry. So the national security calculus is completely different: instead the SPR is mainly an economic tool designed to buffer our economy against global price shocks during times of foreign turmoil, which is exactly the use-case it was just put to when Russia invaded Ukraine and global prices spiked. It should be refilled now, absolutely. But it is not a matter of national security anymore.

ozzydave 4y ago

We should guarantee a price to refill the SPR, so US oil companies will continue to invest in US production for the medium term. https://twitter.com/mattyglesias/status/1572896629489041410?s=20&t=69r9Ger1D4kWVSoRuy0Jyw https://twitter.com/mattyglesias/status/1572896629489041410?...

kshacker 4y ago

If done right, I don't see what's wrong with it. A dozen weeks back, oil was 120, now it is less than 80. We should be able to fill it back and make money while doing it. We did the same thing saving GM more than a dozen years back.

jtc331 4y ago

It's worse than that: once we start refilling it we bring back all of the demand that releasing oil from the SPR kicked into the future. It follows that if either 1.) demand drops or 2.) supply increases the refilling will create exactly the same problem in the future that releasing oil from the SPR was supposed to solve.

sangnoir 4y ago
> It's worse than that: once we start refilling it we bring back all of the demand that releasing oil from the SPR kicked into the future. Translating this into HNese, your argument suggests that disk drive caching shouldn't work. The answer is you can fill your reserves at a much lower rate than you empty them, taking advantage of many small windows.
matthewdgreen 4y ago
It will set a floor on oil prices, keeping them from going as low as they otherwise would have. Some have argued that this is a good thing, since it will help to stabilize the "boom/bust" nature of the industry -- guaranteeing that oil producers continue to invest in expanding supply.

legutierr 4y ago

Is there any meaningful difference between "achieve a lower market price for oil" and "alleviate oil supply shortages"? If the SPR is not intended to alleviate oil supply shortages in a time of war, what else would it be intended for? Think about what has happened in the past nine months. Russia, the country with the most nuclear warheads in the world, invaded its neighbor, where it proceeded to systematically torture and murder unarmed civilians, filling mass graves. Russia simultaneously threatened to invade members of the European Union and the NATO alliance, while threatening to use its nuclear weapons against any country that might dare to assist its victims in defending themselves. In other words, there is a war in Europe, where the aggressor is one of the world's largest energy producers. How is this not the kind of "true national security emergency" (as you put it) that the SPR is intended to address?