Posted on 05/17/2004 12:07:36 PM PDT by varina davis
Oil Prices Fuel Rise in Strategic Reserves Monday, May 17, 2004 12:07 AM ET
With crude oil trading above $41 a barrel and terrorism fears helping to inflate the price, the U.S. has quietly continued to fill its emergency reserves to the highest level ever -- an amount experts say could be used to bring prices down, Monday's Wall Street Journal reported.
To guard against shortages, the U.S. and other nations have a combined 1.4 billion barrels of oil stored away, as governments have been steadily adding to their stocks since the shock of Sept. 11, 2001. Experts say oil markets have ignored that supply amid fears terrorist activity could reduce Middle East oil exports. The market's apparent disregard for that safety net has some analysts questioning whether the U.S. should use the reserves -- or even just threaten to use them -- to help calm the market and signal to the Organization of Petroleum Exporting Countries that the U.S. won't tolerate actions to maintain high prices.
Terrorism fears have resulted in a so-called terrorism premium that has pushed up crude prices as much as $5 to $10 a barrel over what supply and demand would suggest, some experts say.
The rise of crude-oil prices will be the focus of attention this week when the world's oil producers and consumers gather in Amsterdam for the International Energy Forum, a summit to discuss the market and how to better manage energy supply and demand. Among other things, OPEC and the International Energy Agency will be grappling with why prices have soared, even though supplies seem adequate.
Wall Street Journal Staff Reporter Susan Warren contributed to this report.
Dow Jones Newswires 05-17-04 0007ET
Why didn't we fill it when the price was low? Buy high doesn't seam to make a lot of sense.
Crude Oil dropped by a dollar today.
Thought those were set up as strategic reserves -- not for marketplace manipulation..?
We have:
"...as governments have been steadily adding to their stocks since the shock of Sept. 11, 2001."
A good question for Clinton.
Of course, after 9/11 when we had to fill it we had to pay market prices.
Oil prices dropped big time after 9.11... gas was going for under a buck in Los Angeles!
Since it's been going on for some time, it doesn't seem to be specifically a political move to ease consumer stress at the pumps.
Without oil, we don't function. In war time, that is critical.
It was a dig at clintion and his selling of oil to have gorebot.
:->
Democrats to Ask Bush to Release Emergency Oil
http://abcnews.go.com/wire/US/reuters20040517_350.html
Adding to the reserves was a wise move, even though it's hit us all in the pocketbook. After the govenments stop buying to add to their reserves, they stop competing with the rest of the market, so that action should help reduce the demand, thus bringing the price down.
If the suppliers can't see the writing on the wall, tapping into the reserves may have some merit.
But the Pacific Northwest gets their oil from Canada. So trouble in the middle east isn't a viable explanation for high gas prices. Also, the US imports oil from Venezuela.
In 2000, Bill Clinton dumped the US oil reserves on the open market in preparation for his October Surprise (cold weather came, prices rose on lack of oil reserves). This was intended to guarantee Al the election. Remember the left intoning "If you vote for Bush, oil prices will rise" even though oil prices were already rising?
Without 9/11, it would have taken several years to restock reserves to their previous level.
Unfortunately, 9/11/01 did happen, as well as the subsequent military action against terrorists.
Last winter was very cold and long.
Naturally, prices will be higher.
In addition, the futures market is being fiddled with as they always are in an election year. THIS year, the fiddlers are NOT the Bush administration trying to profit from us hapless peasants. It's those who don't want him reelected.
If we drained the reserves, it would reduce gas prices by an average of 3.5 cents a gallon. These figures are from the US Department of Energy.
LLS
No, I think it recovered. Bloomberg shows close @ 41.52.
Senators like to talk about the strategic reserves. They sometimes think market prices can be stabilized by using them properly. One thing for sure: strategic doesn't mean SUVs going to the beach.
Maybe "we" are paying off some producers...
I thought the reserves were only for the military?
If you add to the stockpile a little at a time, it doesn't drive the price up and nobody notices the change in oil consumption.
I think Bush has been doing this since 9/11 which was very smart of him.
Ok. I don't follow that portion of the market as much as I should. My husband does, but he isn't here right now.
Thanks!
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