Curious, does anyone know if the US govt is filling the reserve now, or even adding capacity? With oil so incredibly cheap right now, now is the absolute best time to be building and expanding our reserves.
https://www.washingtonexaminer.com/policy/energy/bailout-for...
I agree with your assessment and this was a serious mistake in my opinion.
There is now however an alternative plan to monetize the remaining open space by leasing it to oil companies that need storage space:
https://www.reuters.com/article/us-global-oil-usa-reserve/us...
Storage space is in very high demand at this point - to the extent that oil tankers are being used as floating storage:
https://www.bloomberg.com/news/articles/2020-04-04/the-most-...
Both parties make mistakes.
Sigh.
Why on earth did they frame this as a "bailout for big oil"? It's a strategic concern for national security.
The shale guys can basically flip a switch and go from 0 to millions of BPD.
So we are really just paying to move oil from one rock formation to another...
If anything, the writing is on the wall for American oil production. The current low prices are mainly a manufactured attempt to bankrupt oil producers with higher overhead costs.
The shale oil in the ground is a perfectly good stockpile as is.
Or so it seems to this perhaps overconfident computer guy with little relevant expertise...
I think the point people are trying to make is that it's quite a bit less expensive to buy crude and store it right now than to extract it from shale in the future.
Even if they were it’s not the purpose of government to gamble public money on market timing bets. Oil has a history of always getting cheaper.
Plenty of private funds are going to be spent in the energy market in these bets.
As an economic investment, it may well be a real good idea to buy up cheap oil now. But that's separate from the stockpile argument.
https://www.energy.gov/fe/services/petroleum-reserves/strate...
Just because the US can transmute solvency risk into inflation risk doesn't mean that the cost goes away.
It was horizontal drilling that made it cheaper.
That doesn't necessarily mean that these things will be cheap in the future. There are plenty of social, economic, or political events that could change that.
Unfortunately this isn’t true. This is what it looks like when the cartel (OPEC) isn’t artificially constraining supply.
Because that is exactly what it is. You're talking about the largest companies in the world, they've have decades and decades of war and subsidy supporting them.
They don't need more support now, especially considering the environmental destruction they cause. Now is a much better time to push forward higher quality energy production technology like solar, wind, batteries, etc.
The other side of the argument appears to want to cause maximum amount of pain to force people to move to the other sources. I understand that argument. I do not really buy it. National stockpile should not be subject to that. It serves a strategic purpose.
edit: added not before take
Why build it to the storage capacity it has if we’re not going to fill it?
I can obviously see that, politically, now is a good opportunity to push agendas that would otherwise not be accepted, but does that really make it a good time overall?
Much better to advance technology when we are fixing our economy versus propping up old, unhealthy means.
It can be both at the same time.
Basically, they can accept oil into the reserve instead of cash payments owed. There's also quite a bit of leeway for borrowing and lending oil as needed, as well as ways to lease unused storage capacity.
And the overall capacity is rate limited such that it takes almost half a year to fill/drain accessible reserves, so it's not like we could just purchases $3 billion in oil tomorrow and instantly put it there. It might store 35-40 days of US needs, but it takes 140-180 days to fill and/or access it. Which makes royalty based purchasing over time align more with ability to accept delivery.
So just because Congress removed that $3 billion, doesn't mean it's not getting filled.
We have emergency supplies, they are in the ground or in shale. The US is the largest producer of oil, low prices means more of it stays in the ground waiting for higher prices.
We have a hundred times more oil in the ground than the strategize reserve can hold. It’s a political boondoggle.
Take the case of the SPR drawn downs after hurricane Katrina. Most of the disruption there was that the ports needed to get the oil on shore were damaged. More drilling wouldn't have fixed that in the short or long term - we just needed to repair the ports. The SPR was able to cover that and minimize the economic shocks of a fairly short term problem.
The strategic oil supplies releases were done to lower prices for summer drivers to prevent damage to Bushes popularity rating.
Certainly blocking pricing mechanisms without any additional government source of supply (I'm looking at you, preventing scalping during disasters) is potentially harmful, but I don't see the harm when they government can step in to meet demand.
On the face, lower oil prices is throwing millions out of work and “damaging” energy companies. But in reality it’s a huge boon for the economy. Outside of the energy businesses we are all energy consuming and cheaper energy makes us all more prosperous. The “damage” to energy companies and their employees is the wise reallocation if investment and labor into industries that now have more value and demand. The “damage” can also be temporary, when prices increase investment and jobs will return.
This rests on speculation about future choices treated as if it were a fact, which is then used to make an absolutist, fatalistic decree.
And all the while the opposite is often true. If a decision is widely believed to benefit the American people, emergencies are excellent catalysts to motivate bipartisan compromise.
It is critical to understand that shale/tar sands oil is very expensive in terms of fugitive emissions, far more than traditional deep wells. An emissions tax is needed to capture this externalized cost. A more stable oil price and greenhouse emissions taxation would encourage better fracking engineering to reduce emissions, as well as reducing pointless consumption.
https://www.bloomberg.com/opinion/articles/2020-04-02/negati...
Plans to expand capacity to a billion barrels with the addition of a new site in Richton, MS were cancelled in 2010.[1]
[0] https://www.spr.doe.gov/dir/dir.html
[1] https://web.archive.org/web/20140710034505/http://energy.gov...
How would Russia’s loss, “For once”, be our gain? Considering the rival interests of Russia and the United States, it would seem that Russia’s loss is usually our gain. What am I missing here?
https://www.energy.gov/articles/us-department-energy-make-st...
The government is not buying any oil. The SPR is being opened up for storage so expensive producers can hold onto supply until prices recover.
For lower quality oil than this standard, lower prices are paid. For higher qualities, higher prices.
"The U.S. Energy Information Administration (EIA) estimates that in 2019, about 2.81 billion barrels (or 7.7 million barrels per day) of crude oil were produced directly from tight oil resources in the United States. This was equal to about 63% of total U.S. crude oil production in 2019." [0]
[0] https://www.eia.gov/tools/faqs/faq.php?id=847&t=6 [1] https://www.huffpost.com/entry/oil-price-fracking_n_5e669a89...