I don't get why people don't just store crude oil and not process it for a bit (I'm guessing six to eighteen months)? I looked online and it seems that for a car, you should fill up the gas tank if you're not going to drive much for months and still go around the block about once a month?
It's the same answer as a lot of "economic mysteries" right now: At scale, everything is really hard.
If we have all this commerically-targeted food that can't go to the consumer market, why can't they just sell it in stores? Well, at scale, everything is really hard. You have to set up supply lines. You have to set up packaging. You have to get the stores to stock it and price it and just a whole bunch of things. Existing consumer supply lines can't be used because they're generally at capacity. Your commercial supply lines are different in numerous ways, from the companies that have it down to the physical nature of the trucks delivering it. And on and on.
The other problem you have is that even though bringing this all up is perfectly possible, it's highly risky. What if the companies spend all this money to bring up a new supply chain or massive amounts of new oil storage, only for the problem to resolve itself a week before it opens? You could build a big storage tank only to open into a market of record high prices for all you know. Sure, if you had a magic crystal ball there's probably all kinds of ways you could make make massive amounts of money from this disruption, but nobody has one.
Except this has already been scaled, and is already happening. The US strategic petroleum reserve (and similar programs in other nations) is exactly this: a giant buffer of storage capacity designed to make cartel exploitation of the oil industry infeasible.
And it works. The reason we're having this crash now, when the lockdowns started 6+ weeks ago, is precisely because there is a big pool of idle storage able to "store the crude and not process it for a bit".
But now all that buffer is exhausted, so we're seeing the crash everyone knew was coming.
Is it full? I recall that the stimulus bill originally included a provision to buy more oil for the strategic reserves, but that the measure got removed by the Democrats. (Both sides are capable of making mistakes...)
We should be buying right now.
> The mission of the Office of Petroleum Reserves (OPR) is to protect the United States from severe petroleum supply interruptions through the acquisition, storage, distribution, and management of emergency petroleum stocks
https://www.energy.gov/fe/services/petroleum-reserves
> The sheer size of the SPR (authorized storage capacity of 713.5 million barrels) makes it a significant deterrent to oil import cutoffs and a key tool in foreign policy.
> Such conditions have only existed three times, most recently in June 2011 when the President directed a sale of 30 million barrels of crude oil to offset disruptions in supply due to unrest in Libya.
> to address short-term, emergency supply disruptions to a refiner's normal operations on several occasions.
https://www.energy.gov/fe/services/petroleum-reserves/strate...
It looks like they're going to lease excess capacity instead. Oil producers will be able to store excess oil themselves:
https://www.worldoil.com/news/2020/4/14/doe-working-to-lease...
It is true that we have some already, and that does make it somewhat easier to build more (it's not like we've never done it before, we have the software and businesses ready to go, the tooling presumably exists somewhere), but there's still substantial expenses that doesn't help with (the tanks still have to be built, land may have to be acquired, you can't just build one in the middle of nowhere in Kansas, you have to have it where the oil can be shipped to, inspections and permits because even under these circumstances I'd still rather like at least the important ones to happen for something like this, etc.).
The differences in the grades of oil require different tooling to process and may be more or less expensive to process.
West Texas fracking crude by contrast is light and sweet.
https://en.wikipedia.org/wiki/Sweet_crude_oil?wprov=sfti1
As to why people don’t store it.. well, we (as a nation, and also the oil industry) try to but it’s only possible to store limited amounts of liquids (notoriously because liquids are incompressible), especially when you’re talking about thousands to millions of barrels per day.
Estimates are that oil demand has dropped by 30% globally, the OPEC+ meeting last week showed us a ~10% global cut by Saudi Arabia/Russia/US... which still leaves a meaty 20% surplus.
A lot of the recent contention has been around when all the (strategic) reserve tanks will fill up and cause the price to really plummet... which we’re seeing now.
"After revealing a long-held plan to try to buy a barrel of crude, I was now receiving a disappointingly stern lecture on the dangers of hydrogen sulfides. The wine tasted vaguely sulfuric, too."
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&...