ABQCOWBOY Posted June 23, 2011 Share Posted June 23, 2011 The White House Releases Oil From the Strategic Petroleum Reserve. Is That Strategic? Posted by Bryan Walsh Thursday, June 23, 2011 at 10:56 am The first time the U.S. released oil from the Strategic Petroleum Reserve (SPR) was in January 1991, as American bombers began the first Gulf War and gas prices spiked. The second release was on September 2, 2005, after Hurricane Katrina smashed refineries and pipelines along the Gulf coast. A war in the Middle East and a natural catastrophe–two of the sort of unforeseeable, potentially massive disruptions to global oil supplies that the SPR was meant to secure against when it was created after the Arab oil embargo in 1975. Now we have a third release from the SPR—but the conditions are a bit different this time around. This morning the International Energy Agency (IEA)—the global body that loosely coordinates international energy policy —announced that it would release 60 million barrels of oil from strategic reserves around the world. For its part, the U.S. would contribute half the amount, releasing 30 million barrels of oil into the world market over the next month. In a statement, Energy Secretary Steven Chu explained the move: Read more: http://ecocentric.blogs.time.com/2011/06/23/the-white-house-releases-oil-from-the-strategic-petroleum-reserve-is-that-strategic/#ixzz1Q7rLSyll -------------------------------------------------------------------------------------------------------------- I have to be honest here, I really don't understand the logic of this move. There is no shortage in the market, so far as I can tell. We only get roughly 2% of our oil from Libya and Saudi Arabia and Canada have both said that they would increase production to help offset any shortages. Would make more sense, IMO, to simply allow for more drilling. The other thing that I don't really understand here is that we are authorizing the release of 60 million barrels of strategic reserve but only 30 million is going to the U.S. If we have problems, why are we giving 30 million barrels to the world market? In any case, this is a short term fix at best. This problem is not going to be solved by these kinds of measures. I don't get it. The oil will have to be replaced in any case so why are we doing this? Makes no real sense to me. Link to comment Share on other sites More sharing options...
SnyderShrugged Posted June 23, 2011 Share Posted June 23, 2011 I think its premature. I also dont think it will help prices much. When Clinton did it, didnt the price only drop like a penny or so? Link to comment Share on other sites More sharing options...
FanboyOf91 Posted June 23, 2011 Share Posted June 23, 2011 Title fail. For its part, the U.S. would contribute half the amount, releasing 30 million barrels of oil into the world market over the next month. 23 June 2011 Paris --- International Energy Agency (IEA) Executive Director Nobuo Tanaka announced today that the 28 IEA member countries have agreed to release 60 million barrels of oil in the coming month in response to the ongoing disruption of oil supplies from Libya. This supply disruption has been underway for some time and its effect has become more pronounced as it has continued. The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further. Greater tightness in the oil market threatens to undermine the fragile global economic recovery.In deciding to take this collective action, IEA member countries agreed to make 2 million barrels of oil per day available from their emergency stocks over an initial period of 30 days. Leading up to this decision, the IEA has been in close consultation with major producing countries, as well as with key non-IEA importing countries. http://www.iea.org/press/pressdetail.asp?PRESS_REL_ID=418 Link to comment Share on other sites More sharing options...
Larry Posted June 23, 2011 Share Posted June 23, 2011 Sign me up as another vote for "WTF?" I don't even think this could be political. IMO, it won't make any difference at all in the price of gas, and even if it did, it wouldn't help Obama with the election. I don't even see a bad reason for it. Link to comment Share on other sites More sharing options...
Predicto Posted June 23, 2011 Share Posted June 23, 2011 I thought we had been looking for a good time to temporarily reduce the strategic oil reserve, because one of the main tank systems needs long delayed maintenance. It might have been a blog rumor, I don't see anything about it in a quick google search. Link to comment Share on other sites More sharing options...
PeterMP Posted June 23, 2011 Share Posted June 23, 2011 I'm assuming somebody knows something we don't. Oil was already down from its spring high in early May of about $115 to about $94 Link to comment Share on other sites More sharing options...
Predicto Posted June 23, 2011 Share Posted June 23, 2011 by the way, the reserve is 725 million barrels. I don't think anyone thinks that releasing 30 million of it is going to have much of an impact on anything. Link to comment Share on other sites More sharing options...
Dan T. Posted June 23, 2011 Share Posted June 23, 2011 Maybe it's to temporarily drop gas prices in an effort to jump start economic growth. Link to comment Share on other sites More sharing options...
Prosperity Posted June 23, 2011 Share Posted June 23, 2011 just though this was interesting: The US SPR is the largest emergency supply in the world with the current capacity to hold up to 727 million barrels (115,600,000 m3).The current inventory is displayed on the SPR's website. As of May 31, 2011, the current inventory was 726.5 million barrels (115,500,000 m3). This equates to 34 days of oil at current daily US consumption levels of 21 million barrels a day. At recent market prices ($65 a barrel as of October 2008) the SPR holds over $34.3 billion in sweet crude and approximately $51.2 billion in sour crude (assuming a $15/barrel discount for sulfur content). The total value of the crude in the SPR is approximately $85.5 billion USD. The price paid for the oil is $20.1 billion (an average of $28.42 per barrel).[1] Purchases of crude oil resumed in January 2009 using revenues available from the 2005 Hurricane Katrina emergency sale. The DOE purchased 10,700,000 barrels (1,700,000 m3) at a cost of $553 million.[2] The United States started the petroleum reserve in 1975 after oil supplies were cut off during the 1973-74 oil embargo, to mitigate future temporary supply disruptions. According to the World Factbook,[3] the United States imports a net 12 million barrels (1,900,000 m3) of oil a day (MMbd), so the SPR holds about a 58-day supply. However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, making it a 160 + day supply. http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States) Link to comment Share on other sites More sharing options...
ABQCOWBOY Posted June 23, 2011 Author Share Posted June 23, 2011 Title fail.http://www.iea.org/press/pressdetail.asp?PRESS_REL_ID=418 Read the article. Link to comment Share on other sites More sharing options...
Predicto Posted June 23, 2011 Share Posted June 23, 2011 Maybe it's to temporarily drop gas prices in an effort to jump start economic growth. No way. It's not going to have any price effect at all. It's way too little. It's only 30 million barrels, and the USA alone uses almost 20 million barrels of oil every single day. The article says the release is just to ease a temporary bottleneck due to the fighting in Libya. I suspect that is the only reason, and that people are reading too much into is. Link to comment Share on other sites More sharing options...
FanboyOf91 Posted June 23, 2011 Share Posted June 23, 2011 Read the article. Try it yourself. Link to comment Share on other sites More sharing options...
ABQCOWBOY Posted June 23, 2011 Author Share Posted June 23, 2011 No way. It's not going to have any price effect at all. It's way too little. It's only 30 million barrels, and the USA alone uses almost 20 million barrels of oil every single day.The article says the release is just to ease a temporary bottleneck due to the fighting in Libya. I suspect that is the only reason, and that people are reading too much into is. The problem I have with this is that all the oil that is released from our Strategic Oil Reserves has to be replaced. We bought that oil at a time that it was much more reasonably priced. Now, we are going to have to go out and 60 million more barrels at current prices to bring us back to grade. That doesn't make a lot of sense to me. ---------- Post added June-23rd-2011 at 01:13 PM ---------- just though this was interesting:http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States) Clearly, you didn't. Taken from the article. The 60 million barrels that will be added to the global oil markets represents a little more than three days of U.S. consumption at current levels. And the U.S. is just one customer—altogether, the release will only account for just 17 hours of global oil consumption Link to comment Share on other sites More sharing options...
SkinInsite Posted June 23, 2011 Share Posted June 23, 2011 This morning the International Energy Agency (IEA)—the global body that loosely coordinates international energy policy —announced that it would release 60 million barrels of oil from strategic reserves around the world. For its part, the U.S. would contribute half the amount, releasing 30 million barrels of oil into the world market over the next month. Link to comment Share on other sites More sharing options...
Larry Posted June 23, 2011 Share Posted June 23, 2011 Does the US Government get paid for this oil? (Not that I think that matters, either. Idle curiosity, only.) Link to comment Share on other sites More sharing options...
ABQCOWBOY Posted June 23, 2011 Author Share Posted June 23, 2011 Does the US Government get paid for this oil? (Not that I think that matters, either. Idle curiosity, only.) That's a good question Larry. I don't know the answer to that but I was wondering about that very same thing. You figure that Oil is currently selling for what, 125 a barrel? Do the math on that and you start wondering why in the world we would do this? I hope we are getting paid for this oil. Link to comment Share on other sites More sharing options...
The Evil Genius Posted June 23, 2011 Share Posted June 23, 2011 That's a good question Larry. I don't know the answer to that but I was wondering about that very same thing. You figure that Oil is currently selling for what, 125 a barrel? Do the math on that and you start wondering why in the world we would do this?I hope we are getting paid for this oil. $91 this morning. Link to comment Share on other sites More sharing options...
Prosperity Posted June 23, 2011 Share Posted June 23, 2011 The problem I have with this is that all the oil that is released from our Strategic Oil Reserves has to be replaced. We bought that oil at a time that it was much more reasonably priced. Now, we are going to have to go out and 60 million more barrels at current prices to bring us back to grade.That doesn't make a lot of sense to me. ---------- Post added June-23rd-2011 at 01:13 PM ---------- Clearly, you didn't. Taken from the article. The 60 million barrels that will be added to the global oil markets represents a little more than three days of U.S. consumption at current levels. And the U.S. is just one customer—altogether, the release will only account for just 17 hours of global oil consumption huh? I just thought the info on the SPR was interesting Link to comment Share on other sites More sharing options...
TimmySmith Posted June 23, 2011 Share Posted June 23, 2011 OK somebody explain this to me. There is a major oil shortfall in the world due to Libya's non-productivity, but somehow this year there is the "normal seasonal increase for refiner demand" which will make the shortfall worse. Huh? What's the point of sending oil into the market if refineries are not equipped to handle it? The oil folks really think we are a bunch of idiots and they do not even try to hide it. Link to comment Share on other sites More sharing options...
Sticksboi05 Posted June 23, 2011 Share Posted June 23, 2011 Well at least prices will drop..oh wait. Link to comment Share on other sites More sharing options...
Heisenberg Posted June 23, 2011 Share Posted June 23, 2011 OK somebody explain this to me. There is a major oil shortfall in the world due to Libya's non-productivity, but somehow this year there is the "normal seasonal increase for refiner demand" which will make the shortfall worse. Huh? What's the point of sending oil into the market if refineries are not equipped to handle it? The oil folks really think we are a bunch of idiots and they do not even try to hide it. twa post coming in 3...2...1... Link to comment Share on other sites More sharing options...
ABQCOWBOY Posted June 23, 2011 Author Share Posted June 23, 2011 huh? I just thought the info on the SPR was interesting Sorry, Prosperity, the first post was in response to you. The second was in response to another poster who was confused about the 60 Million number. I think this is what you are asking? If not, again, my apologies. ---------- Post added June-23rd-2011 at 01:39 PM ---------- $91 this morning. 91 is certainly better then 125 but I'll wager that we probably still paid less for the oil we are releasing. I hope it stays at 91. We won't replace that oil immediately so I guess it will depend on what oil is at when we buy? Hard for me to understand the logic on this one. Link to comment Share on other sites More sharing options...
Burgold Posted June 23, 2011 Share Posted June 23, 2011 I don't like it at least on the surface. Mind you, I haven't read more than the title and skimmed the blurb, but I think if it's to ease gas prices then it is a mistake. That oil should be reserved for crisises or military use not short term economic relief or stimulus. Link to comment Share on other sites More sharing options...
CurseReversed Posted June 23, 2011 Share Posted June 23, 2011 Get ready for a lot more international control over U.S. policy. Link to comment Share on other sites More sharing options...
twist Posted June 23, 2011 Share Posted June 23, 2011 I don't like it at least on the surface. Mind you, I haven't read more than the title and skimmed the blurb, but I think if it's to ease gas prices then it is a mistake. That oil should be reserved for crisises or military use not short term economic relief or stimulus. It's a minor release so it's not strategically important, and, if the market is already saturated, then it should break the backs of the oil speculators as they try to cover their bets. They deserve what they get for consistently betting on misery and thereby taxing everyone. Link to comment Share on other sites More sharing options...
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