Shutting off oil reserve isn't answer

 
LOADING
May 19, 2008 - 04:06:11 CDT
Cutting off the flow of crude oil into the Strategic Petroleum Reserve, as Congress did Thursday, will not hold gasoline prices down nor will it mean significantly more oil on the market.

U.S. Sen. Byron Dorgan put it this way:"Is it a giant step? No. But is it a step finally, at long last, in the right direction? It is."

Maybe. Maybe not.

The Strategic Petroleum Reserve gives the nation a critical tool in case the crude oil market dries up or gets cut off. It gives the nation a 90-day supply of crude. We have more than 700 million barrels of oil, about 97 percent of our goal, tucked away in underground salt caverns in states along the Gulf of Mexico. The federal government has been putting about 70,000 barrels of oil a day into the reserve. The average price for oil in the reserve is $28.42 per barrel (oil recently began selling for more than $125 per barrel).

The reserve was established following the 1973-74 oil embargo. It has been used twice for emergencies:

- During Operation Desert Storm in 1991.

- Following Hurricane Katrina in 2005.

Also, in 1994, then-President Clinton halted purchases of oil for the reserve to help reduce the federal deficit. Clinton, in 1996 and 1997, sold about 28 million barrels of oil from the reserves for federal deficit reduction.

The questions become:Are the high pump prices worth holding the reserve at present levels? Will such action make a difference in price? Would an additional 3 percent in the reserve make any real difference in an emergency?

Responding to consumers, Congress decided the reserve is high enough and, although cutting off the flow of oil into the reserve will not make much difference on price, it will make consumers feel better. President Bush, although opposed to the cutoff, has decided not to veto Congress's action.

The truth of the matter is we have erratic and increasing crude oil prices. Few people believe this is a short-term problem. It is the result of global politics, terrorism and U.S. foreign policy - managed or mismanaged, depending upon your point of view. That being said, America might well be better off topping off the reserve, and holding it for a real crisis.

Is cutting off the reserve a small step? Yes.

In the right direction? No.
   Printer friendly version
Shutting off oil reserve isn't answer
Comments

nodakman wrote on May 19, 2008 7:40 PM:

" to NORM Sen. Mcain was the first one to banter the idea of a gas tax holiday as I recall. Doesn't make the idea any less dumb though.

Oil guy; I think Glenn was speaking tongue in cheek, I hope. "

Halatbis wrote on May 19, 2008 5:28 PM:

" The Alternative fuels conference was held today at BSC. The U.S. is a long way from energy independence, if we ever get there. We can't conserve our way out of the crisis, nor will alternate fuels free us from high priced oil. I do not agree that the people of the U.S. cannot face reality--we will if we can see and hear a congress (both Rep's and Dem's) tell us they have a plan and they all agree on it. When some say we can't drill for oil, and others say no nukes, and others say no wind towers, and others say no ethanol---it is no wonder we do not get anywhere. It is a problem with congress--a problem that we can't fix. "

Oil Guy wrote on May 19, 2008 5:19 PM:

" To Glenn: What, exactly, did Senator Dorgan do to keep the price of oil from increasing more than 75 cents today? Into what did he intervene? I haven't seen him do anything or even suggest anything. Last friday Senator Conrad was a guest on Joel Heitkamp's radio broadcast on KFYR. On that broadcast he put forth an idea that would help. He suggested that the commodity speculators be required to put up a larger margin when they purchase a futures contract. In this thread Norm has suggested that the speculators be forced to actually take delivery of the oil they are buying. Both of these measures would help, because some of the cost of crude is due to market speculators. "

Editorial Staff should stick to religious issues wrote on May 19, 2008 4:41 PM:

" Only a bonehead would continue to store oil while the price is at a record high. Whether it is a "strategic reserve" owned by the federal government or the stocks of some yuppie goober, it doesn't make sense to hoard oil while the price is high. Duh. "

Glenn wrote on May 19, 2008 3:59 PM:

" Thank goodness for Senator Dorgan. I mean, without his intervention, the price of oil could have risne way more than the mere 75 cents it rose today. "

Norm wrote on May 19, 2008 3:52 PM:

" LL. Sorry if I sounded negative. I sure didn't mean to. I must be getting a bit down because no one who has the authority is doing anything about high gas prices and the complete lack of a credible energy plan. I have heard plenty about the modified Prius. What I was talking about was a large scale production model that will appeal to everyday drivers. Very few of us have the ability to buy and intellegently install particular conversion kits and the like to modify our own automobiles. For better or worse, we Americans prefer to buy something-even if it is a bit more expensive- that will do what we want direct from the factory. Now, I am willing to adjust my lifestyle so that I consume less fuel. That is not a problem for me, but it is for those among us who cannot afford the most fuel efficient cars and devices, which is most of us. No, government must lead. For that to happen, our government will have to change. I am not sure that it will without the American people taking to the politicians to demand that our leaders lead us in the direction of less dependence and greater efficiency. "

Law wrote on May 19, 2008 1:46 PM:

" The 70000 barrel pittance going out of the market is not going to make much difference in the price of oil. According to the article we use 7.7 million barrels a day. Curb the speculation and let the price find its equilibrium. "

LL wrote on May 19, 2008 1:04 PM:

" Norm, your negative attitude is discouraging but typical or many Americans. Most of our political leaders are hesitant to pursue methods of solving the present gasoline problem because the American public wants a quick fast solution and none exists. The American public does not want to hear or face the truth. Actually the 100-mpg car does exist. Though the 100-mpg car sounds like a myth, it turns out that such vehicles do exist -- only they're built in your neighbor's garage, not a giant production plant.
Known as plug-in hybrid-electric vehicles (aka PHEVs, or grid-connected hybrids), theyre basically Priuses or similar hybrids that have been equipped with extra batteries so that they rarely use their gasoline engines at all. They get plugged into a wall socket at day's end. Here's the problem, though: Transforming your Prius or other hybrid into one of these gas-sipping wonders is no simple feat. Nor is it cheap and buying a brand-new plug-in off a showroom floor? Impossible, at least for now, so go to your dealer and buy a standard Prius, it will give you between 47-50 mpg around town depending on how you drive it and cruise at highway speed all day (with lower mileage). I know, because I have one.

"

Buy High Sell Low wrote on May 19, 2008 11:23 AM:

" Being at near capacity, buying sweet crude at record high and higher prices for the "Strategic Reserve" makes NO ecomonic sense. But, then if you are the repuglicants, i.e. georgie "the hand of the king holder", shooter cheney, and the "mission accomplished" poseurs you still have the burning desire to diddle the general public and make more and more $$$ for yourselves. Vote GOP for the same thing, only poorer! "

Norm wrote on May 19, 2008 8:25 AM:

" This is another in a long line of politicians pandering to voters. No dofferent than Senator Clinton proposing a federal tax holiday the likes of which Senator Obama voted for in Illinois on one of the few occasions he did not merely vote "present". If Dorgan and his ilk were really interested in lowering gas prices, they would do something to dampen the desire of speculators to drive up the price of oil. Something as simple as making speculators actually take delivery of the oil they are speculating on would certainly slow their zeal and force a more moderate pace of speculation. In addition, President Bush should not go hat in hand to the Saudis begging for more production. He should state unequivically that the US will suspend any arms shipments and parts shipments until those levels are increased. Most importantly, all those politicians should swear off oil industry money and pass meaningful legislation that does more than provide lip service to the notion of alternative energy sources and conservation. The Gates Foundation should offer a $1 Billion prize to the person/company who produces the first gas engine that gets 100 MPG or that effectively uses an alternative source of energy which is viable for the motoring public. "

LL wrote on May 19, 2008 7:54 AM:

" We need the Strategic Petroleum Reserve. Cutting back on the flow of crude oil into it will not hold down prices. There is no simple quick fix to hold down the rising price of gasoline. The market controls the price of gasoline. High demand, low supply equals high prices, prices that will continue to rise. The solution to this problem is in the hands of each American. Some solutions are: Getting rid of the gas guzzler you are driving as soon as possible, avoid jack rabbit starts, drive slower, adopt a 55 mph highway speed limit, use public transportation where it is available, car pool when possible, during the summer walk or ride a bike but alas it will never happen as Americans are addicted to oil and their wasteful driving habits and are unwilling to modify their life styles. I do not have a crystal ball; I have only my mind, the future I can see coming looks ugly. Last evening I watched a special report on CNN about running out of oil, it was hard to watch and finally I could not watch any more of it as it was so bleak. Americans need to understand that our gasoline is not all that expensive; a gallon of gasoline in Norway (the Saudi Arabia of the North) is selling at $8.73, the United Kingdom at $8.38 and France at $8.07. This information was accurate as of May 1, 2008 and liters have been converted to gallons where applicable, Euros and Pounds into Dollars as well. Every drop we, as individuals, conserve gives us the precious time to develop and implement new technologies to move us around, to free us from the fixed geographical location of the past thousands of years, to give us the standard of living we are so used too and so unwilling to modify. "

Post Your Own Comment
(optional)
   
All online comments are limited to 350 words total.
Comments are reviewed for taste, tone and language before posting.
Some comments may be used in the Tribune's print edition.
We value and respect your privacy, but The Bismarck Tribune might
disclose certain information to governmental entities if served with subpoena.

Copyright © 2009 Bismarck Tribune, a division of Lee Enterprises.  -PRIVACY POLICY