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Thursday, April 24, 2008

Strategic Petroleum Reserve Politics

Deep in the south of America are huge stock piles of oil that our government has been pumping into enormous salt caverns since the days of Jimmy Carter. The oil that is pumped in is bought on the open market and kept in reserve for a reason. In times of national and world distress the American economy can not afford a blip in supply if the nations supplying that oil can not do so.

When it comes to tapping the Strategic Petroleum Reserve (SPR) it is at the behest of the President. Something that the current occupant of the White House has failed to do with the run up of commodity pricing on the open markets for his own personal reasons that are known only to him. Some people would say that he has a grudge against American’s simply because he is not popular by even the closest margin of percentage points in the middle and lower classes. Thus he has not tapped the SPR to help American’s where it hurts, not just its people but its businesses that rely on all oil based products.

In to save the day (in her own mind) is House Speaker, Nancy Pelosi. Her idea of a temporary fix to save American consumers five cents plus at the pump is to stop filling the SPR and this is what Reuters has to say about it…

House speaker asks Bush to stop stockpiling oil
By Richard Cowan

WASHINGTON (Reuters) - The Speaker of the House of Representatives on Thursday called on the White House to temporarily stop sending crude oil into the nation's emergency stockpile.

House Speaker Nancy Pelosi told reporters she was calling on President George W. Bush to work with Democrats to find a way to "temporarily suspend" oil deliveries to the Strategic Petroleum Reserve.

The White House immediately rejected the plea. "We don't believe the fill rates have a meaningful impact on oil supplies," White House spokesman Scott Stanzel said.
"We continue to fill the reserve to provide an added layer of protection to the American people in cases of severe supply disruption."

Pelosi said suspending deliveries would save drivers 5 cents to 24 cents per gallon at the pump.

As U.S. benchmark crude oil prices hit a record near $120 a barrel this week, the Bush administration insists that filling the reserve accounts for less than one-tenth of 1 percent of daily supply, and has no meaningful effect on prices.

The nearly 701 million barrels of crude oil stored in underground salt caverns in Louisiana and Texas are meant as a supply buffer in case of major supply disruptions like the 2005 hurricanes that hit the Gulf Coast oil patch. It was created by Congress in 1975 after the Arab oil embargo.

Current shipments come to about 70,000 barrels per day, while the United States uses about 21 million bpd.
- Reuters

Stopping the filling of the SPR is a very bad idea that will never save a penny at the pump for consumers. The price on the open market for oil will continue to rise simply because the investment potential on the commodity market is driving billions of new money every single day into it. Kiss the nickel or quarter savings away within one weeks time. Supply is not the problem! Market manipulation is driving the price higher and higher and that will not end till the government really thinks about it.

Nancy Pelosi should have the guts to stand up and demand an investigation into the top thirty commodity brokers and open up their books under a federal investigation. What is that old saying about following the money? Does she have the guts to do it and follow it up with a knock out punch? I don’t think so. Neither does Byron Dorgan of North Dakota.

Do you personally believe that the average American family in the middle and lower class has the billions of dollars that is flooding the markets to drive the price up? Where might that kind of free cash flow come from? Anyone other than me thinking that the oil companies with record profits in the tens of billions of dollars per quarter might want to make sure those CEO bonuses continue for the long term? What are these companies doing with all that cash while you forgo the better cuts of meat at the market? What are they doing with all that cash when you have to tell your kids that you have to cancel their after school program because the gas to get them back and forth to practice and games is just killing the family budget? What are they doing with all that cash when a tank full of gas is now approaching a days pay for someone at minimum wage?

Wait this story only gets better. How do you defend the future needs of your nations energy needs? You make it impossible for the SPR to ever pump another barrel of oil. Same article from Reuters…

Democrats in the Senate are also pursuing legislation that would require the Energy Department to suspend shipments to the reserve if prices are too high.

Democratic Senator Byron Dorgan of North Dakota said he would seek to attach an amendment to an upcoming supplemental appropriations bill that would forbid the government from sending oil to the SPR if oil prices are above $75 a barrel.

"I believe I have the votes," Dorgan told reporters. "I think I'm going to be able to get this dome." - Reuters

Why not just put a bullet in my kids energy backup future Senator Dorgan. Why not just tell the Saudi’s and all the other oil producing nations that we give up? You win, feel free to rape and pillage our open market society and have your way with us, our children, and our grandchildren.

The SPR is there for a damn good reason and if the market is out of control then President Bush is obligated to intervene during this energy crisis built up by Wall Street. America’s economy only works if the workers at the bottom of it can get to work and the price of gasoline is slowly making that possibility not probable. Releasing one to two million barrels a month from the SPR till the market calms sends a message that tells the market that this is not something you want to heavily invest in. Secondly, if the President initiated full investigations into the oil commodity market it might just stop the endless run up of what basically will kill this economy and its peoples way of life goodbye.

That will not happen so maybe Senator Obama, Senator Clinton and Senator McCain should pay close attention to this topic. After all one of them will be sitting in the White House come January of 09 and this topic just might come up.


Cross posted at, Bring It ON! , and To the Center

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Blogger B.J. said...

“ … the United States uses about 21 million bpd.”

Thanks for such an enlightening post, Papamoka. You are absolutely right about our reserves.

Being legally blind and living alone, I have such a strange perspective on this issue. Since I cannot drive and have no car, I am not burdened by that ever-increasing expense, but a few round-trips in Yellow Cab will make you plan ahead! Since the OPEC crunch of the 70s, I HAVE made every effort to do my part in conserving energy. I’m all-electric, and my electric bill for last month was $44.47. Out of necessity, I have to plan my trips judiciously. For example, I buy groceries once a month. Every day I am met with ever-increasing expenses brought on by surging oil prices, most notably, as you said, with prohibitive food costs.

I do believe Americans could better plan trips, prioritize and sacrifice, but I cannot imagine what a burden these soaring prices put on families with children. The problem we face today should have been addressed in the 70s. If prices dropped sharply today, we would all go about our business as usual and would give this no further thought until they soar again. The time to deal with a disaster is BEFORE it occurs. For three decades Americans have scoffed at “alternative energy sources;” maybe one day they will get it.

4:12 AM  

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