Petroleum reserves Pt. 2 (merged)

[basil_hayden]

Road Trip!

[ian807]

IEA makes 60 million barrels of oil available to market to offset Libyan disruption

Wow, releasing almost, but not quite, one day's supply for the world. Impressive, but not in a good way.

[Hughj]

http://fossil.energy.gov/programs/reser ... leases.pdf


Add to bottom of list .....2011 - Re-Elect President Obama

[Hughj]

You guys are amusing. Yesterday, you argue that the oil markets are delicately balanced
on the head of a pin.......supply carefully matched to demand, straining against Peak Oil
Theory. Today, 60 mmb dropped on the market and it is no big deal! I think you guys
should put your money where you mouth is and buy some Sept oil contracts.

Hugh

[Lore]

Of course the question remains, where is all that Saudi spare capacity, that the IEA has to step into the breach?

I guess desperate times call for desperate measures. The global elite must be quacking in their boots...

They are calling this a bridge to the ramp up in SA production.

[evilgenius]

Sounds like a bridge to an extra ten or fifteen cents a gallon off at the pump to me. You righties can call that a bribe if you want to. I call it putting stimulus into the economy in a much more direct fashion than the crippled banking system can at the present time.

[Pops]

Sounds like a bridge to an extra ten or fifteen cents a gallon off at the pump to me. You righties can call that a bribe if you want to. I call it putting stimulus into the economy in a much more direct fashion than the crippled banking system can at the present time.

I agree, interest free loans to bankers to gamble on commodities, derivatives, etc doesn't seem to have produced many jobs.

[seahorse3]

I don't think this is a political move, bc the Obama election isn't this year. My gut reaction is this is more unexpected blowback from that ill conceived Libyan invasion. This is another move to save the Europeans from this ill fated move in Libya, which was conceived in Europe for Europeans, who goaded the US military under the auspices of "Nato" to lead it military, fund it when Europe is broke, and now tapping our SPR for them.

The news release said "they" would be releasing 2mbpd from strategic stockpiles to make up for the loss of Libyan production. It is true that pre-invasion Libya was producing 2mpbd which almost all went to Europe. This means two things: confirms SA can't increase production and shows how tight the oil market is with the loss of the Libyan crude. What a misinformed adventure Libya proved to be for the Europeans who goaded the US into leading and funding it for them (Obama is now paying a political price for this with Congress threatening to hold him accountable for violated the War Powers Act). This ill conceived attack on Libya caused the world to lose that 2mpd of much needed production, raised oil prices, and now forces the West to tap our oil reserves. The problem is, Libyan crude will be offline for at least a year, so this release of 60mbpd at 2mbpd is only 30 days of oil. What then Sherlock?

[Lore]

This ill conceived attack on Libya caused the world to lose that 2mpd of much needed production, raised oil prices, and now forces the West to tap our oil reserves. The problem is, Libyan crude will be offline for at least a year, so this release of 60mbpd at 2mbpd is only 30 days of oil. What then Sherlock?

This is the slippery slope. Most likely more reserves will be released to continue the unnatural stabilization of the market, because once they stop without new supply taking its place, expect a quick snap back up by the markets.

The fiasco being played out goes back to what has been predicted here for many years by Peak Oil followers and shouldn’t come as much of a surprise. I really don't see how any one player, or governments can or would have prevented ultimately the draw down in supply and the cascade of events that would ensue.

[Hughj]

Drill Baby Drill.

[ColossalContrarian]

The timing of the SPR release is mind boggling, there isn't a shortage but instead a glut and now when the SPR is really needed it will already be used up. Goldman Sachs can still keep the price high too, so this entire charade is impotent!

The unintended consequences are even worse because there's no need for everyone to ramp up supply since demand is so low!

[Ferretlover]

Similar threads (SPR) merged with this one.

[Bill Hicks]

The timing of the SPR release is mind boggling, there isn't a shortage but instead a glut and now when the SPR is really needed it will already be used up. Goldman Sachs can still keep the price high too, so this entire charade is impotent!

The unintended consequences are even worse because there's no need for everyone to ramp up supply since demand is so low!

There's hardly a "glut" with Brent currently in triple digits.

Seahorse is right, this move is to try to save Europe from the debacle of the Libyan campaign. What they plan to do when the 60 days are up and Libyan production is still shut down is anyone's guess.

[Plantagenet]

Drill Baby Drill.

Release Baby Release.

[Keith_McClary]

30 mb is 4% of the SPR. It will still have 10 days of world consumption. No worries.

EDIT:
Kevin Book: SPR Decision Is a Message to OPEC and Speculators

LL: Is the opening of the SPR ill-timed?

KB: The timing is a bit surprising. If the Libyan disruption was a proper supply crisis, why wait until refiners have been running for five months without high-quality crude before responding to it?

There may also be more going on than meets the eye.

In a deleveraging world where bailout dollars are running out, selling petroleum to lower prices may have been viewed as a back-door, consumer-side stimulus that could also capitalize further government spending. And, if current economic conditions have made price interventions acceptable, political factors, including the run-up the 2012 national election could them increasingly so.
...
For decisions like this one, late-breaking data can tip the balance.

Inputs that could have tipped the balance might have been (1) the June 8 OPEC impasse; and (2) a high (>80%) share of rising speculative calendar spreads in crude.

And a rightist cornie viewpoint:
Some Non-Strategic Thinking About A Non-Problem

[TheDude]

Xihuan points out:

Total oil stocks in IEA member countries amount to over 4.1 billion barrels, and nearly 1.6 billion barrels of this are public stocks held exclusively for emergency purposes.

Countries act as Libya deadlock forces IEA to tap strategic oil stock

So ostensibly they could keep up this 60 mb/m charade for 2 straight years. But it just looks bad; many commentors point out the obvious fact that this depletion of stocks will just drive the price up in the end, and it undermines any confidence in the real utility of supposed global spare capacity, too. Robert Rapier has a nifty roundup of Highlights of BP’s 2011 Statistical Review of World Energy where he points out that:

Refining capacity across Europe & Eurasia declined by 1.0% in 2010, which might lead one to conclude that there is more involved here than greedy U.S. oil companies. In fact, global refining capacity increased by 0.8% as refining operations shifted to areas with lower labor costs and more direct access to crude oil. Refining capacity in Africa, China, Iraq, and India respectively grew by 8.9%, 12.%, 6.8%, and 3.6%. I expect the loss of U.S. refining jobs to continue such that crude oil imports are slowly replaced by finished product imports.

I find it quite surprising that Eurasia fell back, even with half of BRIC advancing. In theory all this new refining cap should be able to handle this crappy heavy sour KSA has on tap. On tap, in theory, that is.

All kinda lame, and all very Peak Lite, to use Robert's coinage of, what, 6 years ago? No shortages for quite some time, just prices yo yoing all over the place, tight markets bringing on recessions, half hearted attempts at deploying substitutes, no end of mindless finger pointing, blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah

[ColossalContrarian]

The timing of the SPR release is mind boggling, there isn't a shortage but instead a glut and now when the SPR is really needed it will already be used up. Goldman Sachs can still keep the price high too, so this entire charade is impotent!

The unintended consequences are even worse because there's no need for everyone to ramp up supply since demand is so low!

There's hardly a "glut" with Brent currently in triple digits.

Seahorse is right, this move is to try to save Europe from the debacle of the Libyan campaign. What they plan to do when the 60 days are up and Libyan production is still shut down is anyone's guess.

My point is that the price of oil has nothing to do with the amount of oil available on the market. Yeah, it's strange, No body knows what the price should be and with Libya, there's just another variable in the calculations.

[vision-master]

Sounds like a bridge to an extra ten or fifteen cents a gallon off at the pump to me. You righties can call that a bribe if you want to. I call it putting stimulus into the economy in a much more direct fashion than the crippled banking system can at the present time.

Q3 lsol u2 ev

[Hughj]

I'm going to have a drink! It's 5 oclock somewhere!

Hugh

[Sixstrings]

I'm going to have a drink! It's 5 oclock somewhere!

Hugh

I don't know if anyone's posted it yet, but this is simply due to governments agreeing to release oil from their strategic reserves in order to "boost the economy." The idea is that with lower gas prices, people will spend on other things instead of handing their money over to oil speculators. I'm all for that, but alas it's temporary and not a genuine fix for anything..