U.S. to release oil from strategic reserve

[Curt James]

U.S. to release oil from strategic reserve

By Aaron Smith
June 23, 2011: 03:48 PM EDT

The U.S. Department of Energy said Thursday it will release 30 million barrels of oil from the Strategic Petroleum Reserve to alleviate Libyan supply disruptions -- driving already sinking prices lower.

The release, which will be done over 30 days, represents half of a 60 million barrel supply hike announced by the International Energy Agency, which includes the United States as one of its 28 member nations.

The world consumes 87.5 million barrels of oil a day. Of that total, the United States consumes about 19 million barrels per day, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.

The United States produces about 9.8 million barrels so it winds up importing about half of what it produces. The Energy Department said the reserve is at a "historically high level" of 727 million barrels.

"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," said Energy Secretary Steven Chu. "As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary."

Libya is still locked in civil war, as rebels, aided by NATO airstrikes, try to unseat Moammar Gadhafi. Oil prices, which were already sliding Thursday, fell even further after the announcement.

"Oil prices are getting assaulted on two fronts today," said Kloza. In fact, oil and gas prices have been falling for the past several months. The price of a gallon of gas nearly broke $4 in May.

Gas prices were selling at $3.61 a gallon Wednesday, according to motorist group AAA. Most experts attribute the price declines to expectations of weaker demand as the economic recovery continues to slow.

On Wednesday, Federal Reserve Chairman Ben Bernanke gave a grim assessment. "Bernanke's statement about the 'slowing pace of recovery' was the key to this down move," said Dan Dicker, a former oil trader and author of "Oil's Endless Bid: Taming the Unreliable Price of Oil to Secure Our Economy."

Oil prices plunged $4.39, or more than 4%, to $91.02 per barrel and a four month low after the news about the supply increase. At one point, they plummeted more than 5% to less than $90 per barrel for the first time since Feb. 22.

"There is plenty of supply," Kilduff Group partner Mike Fitzpatrick told CNNMoney. "They want to push prices down to help the U.S. economy. Saudi Arabia called for this at the last OPEC meeting."

The price of Brent crude -- the European benchmark -- declined by nearly 5%, with prices sliding $5.59 per barrel to $108.62.

CNNMoney's Poppy Harlow contributed to this report.

From CNN.com

 

[GearsMcGilf]

Great news! That's about a day and a half of US consumption of oil. This may actually lower gas prices 10-20 cents for a few weeks. No need to even talk about offshore drilling now. But, as long as it gives Barry a slight temporary bump in the poles, as we're approaching election season, we're all better off.

 

[Big Smoothy]

^ and ^^,

Yes, I've read this is an attempt to depress light crude prices and hinder speculators b/c of concern that higher gas prices will hurt the economy even more.

And yes, it's a band-aid on a bullet wound. It will not have any effect.

It's mostly a symbolic move me thinks - and I think it means that things are not good.....

 

[Curt James]

^^^^ Things obviously aren't good.

From the article:

"Gas prices were selling at $3.61 a gallon Wednesday, according to motorist group AAA. Most experts attribute the price declines to expectations of weaker demand as the economic recovery continues to slow."

 

[Big Smoothy]

^ Indeed.

And the term...."economic recovery."

There has not been one yet.

 

[Zaphod]

Alleviate Libyan supply disruptions? Libya supplies about 1% of the crude oil on the world market. Just keep that in mind.

There is something else going on here and this is just a distraction.

 

[maniclion]

So far this month I sold 275,200 Watts of PhotoVoltaic modules or
1,376,000 watts of solar power based on a 5 hour sun-day

1.376 MEGA-WATTS of Pure SunShine Energy in 24 days

By my calculation thats 810 barrels of oil not needed to run our diesel generators....

This counts only what has been taken away and installed, I still have about that much on open orders, way to go Hawaii!!!!

 

[jagbender]

Alleviate Libyan supply disruptions? Libya supplies about 1% of the crude oil on the world market. Just keep that in mind.

There is something else going on here and this is just a distraction.

Disruptions, That Barry help create! Fucking Tard!

Lets all play "get the fuck out of the Middle East" and let those bastards eat fucking sand. What if we develop some of "Our" National resources.


NAAAW that might create a fucking job or something!

The EPA (US govmt) has the regulations so tight and the drilling permits priced so high that it doesn't make it profitable to drill here!

How many permits have been issued to drill in the Gulf of Mexico? like 1


Oh hell no we wouldn't want to do anything that makes any sense now would we.

Off my soap box and going to jump in my BIG Ass Gas Guzzling SUV and go to Walmart and buy some cheap ass forign made goods imported from China.

 

[GearsMcGilf]

Yes, if we really want energy independence and cheaper fuel, perhaps the answer isn't releasing 30MM barrels of oil from the reserves in order to lower prices by 20-30 cents for a few weeks. But rather ending Barry's moratorium on offshore drilling that kills jobs, reduces supply, thus helping to drive up prices. Perhaps expanding offshore drilling, gtfo of the middle east, and in the meantime, with the $ we can save by not having military bases all over the globe, we can invest in the so called clean, renewable energy that to date, does not exist.

Oil spills happen all the time, but they are cleaned up and life goes on. Forcing a moratorium on offshore drilling over one oil spill is akin to banning air travel after a single plane crash and Barry knows this. In this case, it was just a political move to appease his left wing base.

 

[LAM]

Yes, if we really want energy independence and cheaper fuel, perhaps the answer isn't releasing 30MM barrels of oil from the reserves in order to lower prices by 20-30 cents for a few weeks. But rather ending Barry's moratorium on offshore drilling that kills jobs, reduces supply, thus helping to drive up prices. Perhaps expanding offshore drilling, gtfo of the middle east, and in the meantime, with the $ we can save by not having military bases all over the globe, we can invest in the so called clean, renewable energy that to date, does not exist.

Oil spills happen all the time, but they are cleaned up and life goes on. Forcing a moratorium on offshore drilling over one oil spill is akin to banning air travel after a single plane crash and Barry knows this. In this case, it was just a political move to appease his left wing base.

you aren't looking at the big picture in regards to the relationship between the oil and financial markets, there is a currency dilemma the weak dollar. the weak dollar does cause OPEC to charge more for crude since all transactions are in the dollar and a good portion of their assets. OPEC nations are the 3rd highest holder of us debt. OPEC nations do not trade with the US they trade heavily with Europe so you have to look at how the dollar stands against the yen, pound and euro as this effects the export earnings of OPEC nations and offsets the cost of importing goods from EU nations. low interest rates make the dollar look more attractive it also helps to fight inflation for those in the lower income quintiles. very few could handle say a 10% increase in interest rates with stagnant wages at the bottom it would be devastating to the economy to say the least. at this point OPEC nations would be better off changing to another reserve currency from one of their heavy trading partners, if they did that pretty much only the US and Venezuela who trades heavily with us would be severely effected by that change. OPEC nations trade about 40% with various EU nations and only about 15% with the US. by continuing to use the dollar for OPEC transactions it comes at about a 30% loss when compared to pricing in the Euro. needless to say, we are paying the price for this

 

[GearsMcGilf]

Yes, the weakened dollar does drive up the price. No doubt about that. But, I am looking at the bigger picture here. All else being equal, declining of the dollar aside, we know that an increase in supply would lower the price dramatically. OPEC would have no choice but to lower the price in order to compete. Just imagine if tomorrow Barry announced that the moratorium was lifted and we were going to expand oil exploration domestically. Think of the jobs that would be created and how the drastic drop in price would affect everything from the price of groceries to air travel. In addition to this, we could also tell the saudis to go fuck themselves. Simply releasing 30MM barrels is like spitting in the ocean. It ultimately has no effect on price.

 

[jagbender]

Yes, the weakened dollar does drive up the price. No doubt about that. But, I am looking at the bigger picture here. All else being equal, declining of the dollar aside, we know that an increase in supply would lower the price dramatically. OPEC would have no choice but to lower the price in order to compete. Just imagine if tomorrow Barry announced that the moratorium was lifted and we were going to expand oil exploration domestically. Think of the jobs that would be created and how the drastic drop in price would affect everything from the price of groceries to air travel. In addition to this, we could also tell the saudis to go fuck themselves. Simply releasing 30MM barrels is like spitting in the ocean. It ultimately has no effect on price.

 

[oufinny]

Yes, the weakened dollar does drive up the price. No doubt about that. But, I am looking at the bigger picture here. All else being equal, declining of the dollar aside, we know that an increase in supply would lower the price dramatically. OPEC would have no choice but to lower the price in order to compete. Just imagine if tomorrow Barry announced that the moratorium was lifted and we were going to expand oil exploration domestically. Think of the jobs that would be created and how the drastic drop in price would affect everything from the price of groceries to air travel. In addition to this, we could also tell the saudis to go fuck themselves. Simply releasing 30MM barrels is like spitting in the ocean. It ultimately has no effect on price.

People who don't work in Oil and Gas rarely understand how many jobs it creates. If the US actually drills like it should(look at the north sea) it will create millions of jobs. Instead my company laid a bunch of people off in March, now we are busy as he'll, people are overworked and moving to different companies. This is all courtesy of Barry O indirectly. He didn't destroy the oil industry as it is picking up, but his lack of direction and leadership on an energy policy will equate to him decimating it for years. Watch the output numbers continue to decline in the next 1-5 years. Even if a pro oil president is elected, it would be the end of his first term before the industry has any resemblance of recovering.

 

[GearsMcGilf]

People who don't work in Oil and Gas rarely understand how many jobs it creates. If the US actually drills like it should(look at the north sea) it will create millions of jobs. Instead my company laid a bunch of people off in March, now we are busy as he'll, people are overworked and moving to different companies. This is all courtesy of Barry O indirectly. He didn't destroy the oil industry as it is picking up, but his lack of direction and leadership on an energy policy will equate to him decimating it for years. Watch the output numbers continue to decline in the next 1-5 years. Even if a pro oil president is elected, it would be the end of his first term before the industry has any resemblance of recovering.

^This^ Unfortunately, Barry does have a very clear energy policy. Fortunately, he has zero chance of forcing it on us. It's hard to fathom that a guy can makes statements like this and and still manage to be elected president.

YouTube Video

YouTube Video

 

[LAM]

Yes, the weakened dollar does drive up the price. No doubt about that. But, I am looking at the bigger picture here. All else being equal, declining of the dollar aside, we know that an increase in supply would lower the price dramatically. OPEC would have no choice but to lower the price in order to compete. Just imagine if tomorrow Barry announced that the moratorium was lifted and we were going to expand oil exploration domestically. Think of the jobs that would be created and how the drastic drop in price would affect everything from the price of groceries to air travel. In addition to this, we could also tell the saudis to go fuck themselves. Simply releasing 30MM barrels is like spitting in the ocean. It ultimately has no effect on price.

your looking at it the wrong way, you are trying to solve a problem and you know the form of "capitalism" practiced in the US does not do that. just forget about expanding offshore drilling and the small amounts of jobs it would create, etc.

having OPEC use the dollar for all transactions is a commodity of sorts as it ties the US dollar to economies of the OPEC nations that we don't really trade with. the fact that OPEC nations use the dollar instead of the euro places an unnecessary element of currency exposure to them. the euro has made great progress in past years and in terms of world GDP the US is at 20% and the eurozone about 16%. in 2000 Saddam switched Iraq to using the euro for oil purchases he also converted all reserves monies held by the UN to the euro as well. this was the 2nd factor for Gulf War II, the first being the end of the 75 year lease made between the puppet leader of Iraq after the fall of the ottoman empire after WWI. Iran would have soon followed and the rest of the OPEC nations as well. the US dominates global economics only because of the dollar, all hedging transactions, etc. all take place in dollars. eurozone nations have been trading petro in euros for years now. once norway and the Uk switch to using the euro for petro it's pretty much game over for the US. this is one of the major reasons why the US does not trade equally with anyone we are not really in any type of position to be able to "stir the pot".

 

[GearsMcGilf]

Yes, the dollar to Euro ratio is roughly 1:1.4. So, it would be no surprise, as the dollar continues to decline in value, that OPEC nations would peg the price of oil to the euro at some point. That aside, I don't understand why people on the left see domestic drilling as such an evil, as if we're going to destroy the planet if we pursue energy independence via domestic drilling. In fact, the jolt that it would give our economy would likely boost the dollar back to where it was a decade ago.

It's clear why the price of oil is where it is. But, when there are obvious, simple solutions right in front of us, it makes no sense not to act on them.

 

[danzik17]

Yes, the dollar to Euro ratio is roughly 1:1.4. So, it would be no surprise, as the dollar continues to decline in value, that OPEC nations would peg the price of oil to the euro at some point. That aside, I don't understand why people on the left see domestic drilling as such an evil, as if we're going to destroy the planet if we pursue energy independence via domestic drilling. In fact, the jolt that it would give our economy would likely boost the dollar back to where it was a decade ago.

It's clear why the price of oil is where it is. But, when there are obvious, simple solutions right in front of us, it makes no sense not to act on them.

I just don't see it happening. Even if we opened drilling up with no restrictions tomorrow, it would take years before new rigs came online unless I'm mistaken. The total output of those new rigs would in the meantime probably just equal rising demand. It's a no-win game we're playing with oil.

Personally, my solution is to cut hundreds of billions of dollars from the budget consisting of unnecessary military and subsidy spending and increase government R&D funding by billions of dollars.

The internet originated as ARPANET, a military research project to create a decentralized communications network in the event of nuclear attack. I don't know how much it cost, but the money spent on that project has paid hundreds of billions in dividends to the US (if not trillions by this point). The same thing would happen if the military were to research and invent renewable energy for their equipment which would have immediate civilian applications. It would also give a significant strategic advantage by making our military self-sufficient and not dependent on a dwindling resource that we mostly import.

 

[GearsMcGilf]

I just don't see it happening. Even if we opened drilling up with no restrictions tomorrow, it would take years before new rigs came online unless I'm mistaken. The total output of those new rigs would in the meantime probably just equal rising demand. It's a no-win game we're playing with oil.

Personally, my solution is to cut hundreds of billions of dollars from the budget consisting of unnecessary military and subsidy spending and increase government R&D funding by billions of dollars.

The internet originated as ARPANET, a military research project to create a decentralized communications network in the event of nuclear attack. I don't know how much it cost, but the money spent on that project has paid hundreds of billions in dividends to the US (if not trillions by this point). The same thing would happen if the military were to research and invent renewable energy for their equipment which would have immediate civilian applications. It would also give a significant strategic advantage by making our military self-sufficient and not dependent on a dwindling resource that we mostly import.

Yes, it would take years before the new oil supply came online. Yet, if we'd started 10 years ago, it would be available now. Even so, just the announcement that we were going to begin actual domestic oil exploration would send the speculators (who are driving up the prices for all of us) running with their friggin tail between their legs. More supply = lower price. The price would plummet overnight and we could stop funding terrorism against our own country by paying the saudis hundreds of billions every year for their oil.

 

[LAM]

Yes, the dollar to Euro ratio is roughly 1:1.4. So, it would be no surprise, as the dollar continues to decline in value, that OPEC nations would peg the price of oil to the euro at some point.

it's a little bigger than that. one of the main reasons why OPEC has not transitioned to the euro is because the US is a heavy importer of OPEC oil. once that demand decreases there is no reason for OPEC to not transition to the euro, it is the reserve currency of all it's trading partners. doing so will remove the currency exchange risk for OPEC nations and the eurozone.

nations all over the world are starting to diversify their currency reserves. since '45 the US has been supplying the world with currency for business transactions, etc. this is how the US came to dominate global economics not because we are better at it. every time a country is liberated from say communism, etc. the demand for the dollar increases and the FRB prints more, causing inflation to increase which in turn causes the costs of various commodities to increase. there is a huge disproportion of us currency in the world when compared to our trade imbalances. Canada, Asia and Latin America are all diversifying there reserves. this further fuels the rise of the euro against the dollar.

the US doesn't make anything anymore for sale on the world market and on top of that we are a debtor nation. most of the goods imported into the US are from US company's overseas operations. only those that trade heavily with us need the dollar as they save on exchange rates when buying US t-notes. countries all over the world are making changes to their banking systems except for the US, we still haven't implemented basal II. the UK has begun the process of breaking up the banks deemed to big to fail, where in the US there are getting bigger and bigger.

things are going to get interested after the next market crash, the days of the dollar hegemony are nearing...