Posted on 03/09/2011 10:44:06 AM PST by gleeaikin
Oil's surge to more than $105 per barrel -- which has caused the average price of unleaded regular to jump more than 40 cents in less than a month to about $3.50 per gallon -- is rooted more in psychology than in fundamentals.
Globally, there's no shortage of oil, nor any lack of gasoline in the U.S., but traders' fears that the civil unrest in minor oil exporter Libya may spread to major oil exporters Saudi Arabia or Iran has led an oil price spike, led by market speculators and large end users of oil.
However, the U.S. government is not powerless: It can help take some pressure off oil's price -- if it addresses both market psychology and oil's fundamentals. Here's how:
1. Random Releases From the Strategic Petroleum Reserve
Previous draw-downs from the SPR, which currently holds 727 million barrels of oil, in 1990-91 (Desert Storm, 17 million barrels), 1996-97 (deficit reduction, 28 million barrels), and 2005 (Hurricane Katrina supply disruption, 11 million barrels) did cause prices to decline somewhat. Another sale in 2011 might do an even better job, if properly structured.
For example, if Washington announced that it plans to release, at random times, an unspecified amount of oil from the SPR, that would immediately create more downside price risk and scare some of the speculative net long positions -- for oil traders who don't take delivery of oil -- out of the market. This psychological component -- not the actual amount sold -- is the SPR's primary price weapon.
See full article from DailyFinance: http://srph.it/empNgF
I would say none, with the possible exception of different blends. I also want all current taxes actually going to roads. Not to railroads, not to bike paths, not to the general fund.......just roads.
I wonder why they didn’t suggest more drilling, nuke plants and transitioning to natural gas for trucks, buses, cars, etc.
55. Oh, boy. Jimmah Carter rides again.
1) US DOE announces it will issue fast-track permits for 20 new nuclear power plants.
(2) US also announces we will drill for our own oil everywhere we find it.
World oil prices drop to $30/barrel within 48 hours. Not to mention the jobs created thereby, and the resultant increase in the tax base.
But, I may be missing something.
The article was focused on ways in the near term they could act, not the long range. For some reason the link did not post under the excerpt. Here it is:
Fine with the first four; I’d pay the extra 35 cents a gallon rather than deal with the 5th. I’m generally against tapping the strategic reserve, but if it’s temporary, sporadic, and would be replenished, I could go with it.
But he left out the most important - open up ANWR, the Gulf, and both coasts to drilling; issue a slew of permits; and watch the speculators soil their britches.
Random SPR releases would not help much, if at all.
Increasing margin requirements would simply drive the "speculators" offshore. Duh.
Temporarily suspend "boutique" blends. Make it permanent.
If 55mph is good, how about 45mph. Save more oil and save more lives.
I have some better ideas.
1. Drill everywhere.
2. Build 10 coal to oil plants.
3. Build 20 nuclear plants.
4. End the ethanol subsidy and all subsidies to "green" initiatives, saving untold billions.
The US has more oil reserves than Saudi Arabia, China and Canada put together (I read that on FR). Get the government out of the way and develop them.
1.) Drill here, drill now
2.) Get the environmentalist whackos out of the way
3.) Fire Obama
4.) License Nuclear plants
5.) Fire Obama
"The government" wants to force us all into their "public transportation" system.
Makes it easier to keep us under surveillance, and gives easier access to us by muggers and gangs of feral children.
Insane and a false premise. Releases for price control of the SPR limit the ability to handle future oil supply disruptions leading to a greater need for Gulf Coast refineries to increase they amount of oil the keep on hand.
It is called a Strategic Petroleum Reserve for a reason. It should not be used as a political football.
Let the market crash.
But would only have a short term effect.
Face it, this Administration, the Environuts, the Fascist, Socialism loving Left, all LOVE killing America. This is just ONE avenue of their destruction.
Destroy our currency is another. Fiscal Moron Ben is working on that.
The destruction of our dollar is more dangerous than the shutting down of this country’s ability to have energy.
“I wonder why they didn’t suggest more drilling, nuke plants and transitioning to natural gas for trucks, buses, cars, etc.”
That would actually make sense.
Obama has no intention of helping prices fall. “We need to send price signals”
http://www.youtube.com/watch?v=bueCxeXZAUU
More GE-made windmills, (non-recyclable) solar panels and cap and tax.
2. Yes. Good idea. Would go even further and find way to end such speculating altogether
3. Yes. In fact, make it permanent
4. Yes. In fact, go further. Move to a limited number of nationwide formulations that remain the same year round.
5. Nope. May reduce gasoline costs but will cause price increases in other things. A stupid idea.
6. ...and this should be priority number 1...establish an energy policy in this country with one primary goal: plentiful, cheap energy. Drill, mine, build (as in nuclear power generating plants and refineries).
We don't use oil to any significance to generate electrical power. Most of what we do use is refinery leftovers like Petroleum Coke and Residual oil, the remains of crude after the high value products like gasoline and diesel have been removed.
It is a good idea, but it would have zero effect on the demand and future demand of oil.
Barry is gonna pick Option #2, stomp down on the Greedy Speculators. That works for him on so many levels...
I remember the 55 mph speed limit all too well. I was working for the State of SD at the time and the governor imposed the 55 mph limit for state vehicles long before it went national. South Dakota is a very large state and at 55 mph getting anywhere from the capitol in Pierre takes most of a day at 75 mph ...at 55 mph it added almost a half day to travel time.
No, you aren’t missing anything at all.
It might even save the dollar, as well.
But the Commie Left won’t hear of it.
The slow squeeze of Americans is proceeding according to plan, slow creeping socialism is already rampant in our society, a third of the people depend on the government, and the productive are being taxed and currency weakened to the point they will be lucky to stay afloat, in the next few years.
Isn’t public schools, social security, taxes and fiat reserve currency wonderful? /s
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