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Permalink Reply by JHH on March 13, 2011 at 14:47

Thanks for posting the information.  Typical politics.  First, is there a declared NATIONAL EMERGENCY that necessitates the need to use the oil reserve other than reducing higher gasoline prices.  AND when did the strategic oil reserve become a bargaining chip to obtain political enterprises like providing incentives for production of NG and electric cars, ending "tax breaks" for oil companies and keeping home produced oil here at home.  Why doesn't he also propose more incentives for ethanol... let's burn more of our food!  It's the same old ... excuse me... chicken crap!

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Permalink Reply by The_Baron on March 14, 2011 at 3:19

Idiots.

 

Right now Cushing is slap full. More oil supply will do nothing to our current pricing.

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Permalink Reply by Mac Davis on March 19, 2011 at 8:38

The SPR needs to be reserved for times when oil is not available to keep the military and the economy going in times of shortage.  It's not to keep gasoline prices stable. 

 

I'm ticked off that they haven't built more SPR storage areas.  I'd suspect there are many more salt domes where more storage of crude oil could be built.  Create some more storage areas, and have a larger reserve for the next time there is some sort of problem with foreign oil supplies. Or US oil production for that matter.

 

Once we've gotten a bigger margin for "strategic" oil reserves, they should build some "economic" reserves.  Make an additional set of storage reservoirs, and buy oil when prices are low, and sell oil them when prices are high.  Manage this reserve separately as a price stabilization mechanism, not as a strategic reserve mechanism.  The problem with trying to mix the two is that if you're managing for price, if a true long term oil shortage is happening, prices will drift up, you'll empty your reserve storage because prices are high, and then, when you reservoir runs out, you'll find that there really is a shortage and you'll have no reserve.

 

The other problem with using the SPR for price control is that if it works, when oil supply gets short and prices get high, you keep prices down and remove some of the incentive to drill for more oil, or even to reduce oil usage.  If there really is a problem with oil supply and price, you hide the problem and keep people from fixing it.

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