Oil reserves are nearly full, but consumers are feeling the pinch

The nation's emergency supply of oil, the Strategic Petroleum Reserve, is at a record high. That's thanks to a Bush administration decision, spurred by the September 11 attacks, to reach capacity by next year. However, some industry critics and economists charge that this aggressive stockpiling is helping to raise prices at the gas pump by reducing the amount of oil on the market.




Federal officials, backed by the oil industry, maintain that the policy is necessary for national security and is having a negligible impact on prices. But the airline industry, some in Congress, and several economists say the SPR policy adds from $2 to $10 to the price of each barrel of oil, which last week hovered above $36, a high point since the run-up to the Iraq war. The average gasoline price has increased 21 cents since the start of the year to $1.72 a gallon. And in the face of burgeoning demand in China, political unrest in oil-producing Venezuela, and planned production cuts by the Organization of Petroleum Exporting Countries, government forecasters last week warned of higher pump prices and shortages by the summer driving season.

For the beleaguered U.S. airlines, which last year lost more than $5 billion, any increase in oil costs is painful. Fuel is the airlines' second-biggest cost, with every dollar increase in the price of a barrel of oil adding $425 million to the industry's expenses. "We think there is a strategic need for the SPR," says James May, president of the Air Transport Association. "But we also ought to have protections to our economy." The group has urged the administration to slow down the rate of upping the strategic reserve when oil prices are high.

But Energy Secretary Spencer Abraham has said the administration has no intention of deferring deliveries to the Gulf Coast salt caverns that now hold 640 million barrels of oil, a record since the reserve was established in the wake of the 1973 Arab oil embargo. Although Abraham has expressed concern over climbing oil prices, he largely blames OPEC production cuts. He speculates that the cartel would simply cut output further if the United States temporarily ignored the SPR. Also, Abraham is doubtful that the average 120,000 barrels a day the government puts in reserve significantly affects prices in the 80 million-barrel-a-day global market. John Felmy, chief economist for the oil industry's American Petroleum Institute, agrees, putting the price impact of the administration's SPR policy at no more than 60 cents per barrel--a bit more than one penny per gallon.
<snip>

http://www.usnews.com/usnews/issue/040315/biztech/15oil.htm

maybe in the Fall run up to the election?

I wonder if Congress has to approve tapping in to the Strategic Oil Reserve, or can Bush just sneak around and do it with no one watching?

I sure hope he doesn't have that kind of power!

there it is...

On CNN last night they were just talking about how another oil refinery is to be shut down in a few weeks, causing more of a price pinch. We haven't built nearly enough new refineries in the past few decades to meet our needs. Even if Bush dumps all that oil onto the market, it won't bring down gas prices until it can be refined.

I will use it to refute a rapid Republican woman I know who was telling people at the YMCA that the "Arab oil sheikhs were driving the price of oil up because they want to hurt Bush's election chances." This article is a great refutation.

be careful, her head may explode.

are being built up in order to meet the eventual dangers of
peak oil's consequences.
I think that the bushistas are seeing something on the horizon that
the sheeple aren't allowed to notice.

I have yet to see in this misadministration.

you miss the point. Many people miss the point when it comes to
the strategic oil reserves. Its more to keep the government working
and the military operational. Don't you dare dream that this oil
will be for us...

4 generations of Bush, beginning with Sam Bush, the WW1 munitions profiteer, (Thompson machine gun, other small arms, Remington), and rubber tire magnate in the 1920's, MONOPOLIZED transportation system modality in promoting the auto age, dismantling electric rail mass transit, dismissing pedestrian safety.

The problem is not so much the oil, as the car itself and its drug-like addition. The Bush crowd will not wean US addicts off a highly profitable dependency. OK, now go into denial.

he noticed that the US govt was building up its oil reserves, and thought that the trick here was to use it at an opportune time to create a "mini-boom" in the economy.

Looks like it might be a possibility.

reducing availability of oil. Create an artificial shortage by having maintenance work on the holding tanks.

When fuel costs drive the price of airline tickets out of the reach of the masses, the airlines will collapse. With cost structures as they are today they can't afford to serve only the well off as they did before deregulation.

I have the felling that that will be the point at which there will be a huge demand for travel and no mass transport to carry them. It will be the perfect time to begin to build a high speed mag-lev rail system across the country. Something we've needed for a long time, but the political power of the airlines never let passenger rail get off the ground (pun intended).

"I believe the vice president has made this decision, with the support of the president, for short-term political gain."

- Candidate George W. Bush



Clinton Releases 30 Million Barrels From U.S. Oil Reserve

UPI
Saturday, Sept. 23, 2000

WASHINGTON – President Clinton on Friday decided to release 30 million barrels of oil from the nation's strategic reserves of petroleum.

Energy Secretary Bill Richardson said the decision is meant to forestall huge heating bills this winter.

"Earlier today, the president directed me to exchange 30 million barrels of oil from the Strategic Petroleum Reserve over a period of 30 days," Richardson said. "We need to make sure that American families keep warm this winter."

Richardson said rising home heating oil prices and low reserves were the reason for the decision. But he added that the move could reduce fuel prices as well, such as high diesel fuel used in trucks.

{snip}


Richardson said of the 30 million barrels, about 5 million will become home heating oil.

A Favor to Gore?

Democrat Vice President Al Gore called on Clinton Thursday to release oil from the reserve. Richardson said the move had "absolutely" nothing to do with helping Gore politically.

But Texas Gov. George W. Bush, Gore's Republican rival in the presidential race, told supporters in Florida on Friday, "I believe the vice president has made this decision, with the support of the president, for short-term political gain."

Don't Expect Lower Prices

But an oil release might do little to lower energy prices. Domestic refineries still must refine that oil. Refineries are already working at nearly 100 percent capacity, said Edward Murphy, of the American Petroleum Institute.

The administration is taking other steps to avoid a crisis in home heating oil, Richardson said.

Clinton this summer also established an emergency home heating oil reserve in the Northeast to supply oil to homes in the case of emergency. That reserve already contains 1 million barrels.

The decision by the president comes on the heels of significant pressure from Capitol Hill. Richardson met several times this week with concerned lawmakers, who pressured the administration to release the oil.

A bipartisan group of 113 House lawmakers led by Rep. Bernard Sanders, an independent from Vermont, sent a letter to Clinton on Wednesday asking that he "immediately swap crude oil from the Strategic Petroleum Reserve with the oil industry."

"The SPR currently contains 576 million barrels of crude oil," the letter stated. "Investment experts in the petroleum market believe that just a small release of oil from the reserve could immediately stabilize prices and convince OPEC ministers to increase production by a modest amount."

{snip}

Richardson said Clinton decided to move now because weather in some areas had already turned cold. "Portland, Maine, will be in the 50s next week. So will Minneapolis. And it snowed in the Rockies yesterday," the energy secretary said.

Pretty sad.

over.



from: http://edweb.sdsu.edu/wip/examples/gas/ which also investigates gas prices in conjunction with both Gulf Wars. There is no mention of Clinton's penis.

I think Clinton and Gore's actions were more symbolic than economic: they wanted to the public to percieve them as doing something about the higher prices.

In the end I don't think it mattered much even though Gore did win.

It will be a bit more difficult for Bush to pull off the same trick since his buddies in the oil industry are making a killing on these higher prices and would balk at attempts to lower prices artificially.

But the real problem will arise for Bush if the Consumer Price Index (CPI) the official inflation index rises as a result of producers passing on higher transportation and energy costs to consumers.

Then Greenspan (if he's reappointed in June 2004) may need to step in and raise interest rates. This could start a recession. The housing bubble would burst.

30 million barrels over 30 days, that is about 2$ - 3$ off a barrel of oil. I think we can expect the same from bush*.

according to the equation I have, which is:
a 1% change in supply equals a 10% change in price.

120,000 barrels per day is about 0.2% of supply (actually under that), so 2% of say $30 is 60 cents.

equals about 2.5 - 3 million barrels per day change in supply.

are what is remaining. Never mind that any business should be happy with a decent 150% return on investment. These greedy want at least a 500% return on everything. Inflation will be back in spades and no matter how much Greenspan tries to keep helping Bush with low interest rates, that will change too. I still say the middle and lowe middle income people should just stop buying and save their money for a year even if it means keeping it in a shoe box. Nothing matters like the bottom line.