[ROCKMAN]

T - Once again someone who doesn't appreciate how relatively small our SPR is compared to global consumption... About one weeks worth. He also isn't aware that the CONGRESSION LAW that governs the SPR specifically prohibits any POTUS from using it to manipulate the price of oil. It would take a full Congressional vote to do it. The law also limits the release to 30 days as well as mandates it be replaced rather quickly.

And besides SPR is physically designed to only deal with very small supply disruptions over short periods of time. An ability it barely has as proven by past events.

[Tanada]

The crux of this thread is less obvious than I had intended it to be.

Governments throughout history have subsidized things they wished to encourage and taxed those things they wish to discourage. This is in addition to the regular types of taxes raised to allow governments to preform their necessary functions.

Subsidies also come in more than one variety, but the two main types are subsidies to end consumers, and subsidies to producers.

If you subsidize the consumers they can use their increased discretionary funds to buy whatever they want. This has a blanket growth effect on the general economy.

If you subsidize the producers of the particular thing you want to encourage, solar PV panels, or corn ethanol facilities or oil at the well head you encourage the producers of those things to produce more because they have a guaranteed minimum price. In this fashion the consumers of whatever the government subsidizes have increased discretionary income and that stimulates the rest of the economy to grow. For products like Solar PV the number of consumers is pretty small so the impact is also pretty small. However for a product like oil well head production the number of consumers is vast. Naturally the number of produced barrels of oil is also vast, otherwise it could not supply all the consumers.

The government expense of for example a $20/bbl production subsidy to USA well owners for the 8 MM/bbl/d of production would be $160,000,000/d or $1,120,000,000/week or $4,800,000,000/month or $58.4 Billion dollars per year.

To a government that spends Trillions of dollars every single year a direct subsidy of less than 60 Billion is trivial. For the consumers of domestic crude oil in the USA, namely the refineries, the lowering of costs would allow them to sell their products to the consumers at a substantial discount.

The increase in discretionary spending for those end consumers would then go on to stimulate the broader economy starting with vehicle sales and going right up the chain of products. The ripples of that economic growth would increase federal tax revenues by the stronger economy. There is some sweet spot of stimulation effect where the subsidy going out causes a balanced increase of revenues coming in.

Of course after we are on the down slide from Hubert's Peak of world oil production world oil prices will head back up significantly. The question is, can the government subsidize the cost of production by enough to keep the economy going? In a real economic crash the Government will have a thousand demands and not nearly enough revenue to satisfy all of them.

Looked at another way, the USA federal government dumped trillions of dollars into the financial sector of the economy over the last 8 years, probably a lot more than any of us will ever know. If 10 percent of that same money had been used to keep prices $20/bbl cheaper than they were from 2010-2014 that might have had a much more useful economic impact than protecting the banking sector alone. But hey, I don't work in Washington D.C. and once upon a time long long ago I was a math major in University who had to learn how budgeting in the real world work instead of in the political world.

[ROCKMAN]

T - I see the point you're trying to make. But:

"...government expense of for example a $20/bbl production subsidy to USA well owners for the 8 MM/bbl/d of production...".

Do you mean give producers $20/bbl more then they getting TODAY if they spend the EXTRA $billions on new wells if more then the are spending...or will spend. "Will spend" is rather nebulous.

And I'm not sure how the govt giving producers $20/bbl reduced the price refiners pay. Decades ago the govt tried price controls: lower prices for existing production and higher prices for "new oil". A huge failure.

[sparky]

.
An alternative would be to seriously curtain price speculation on gas and crude oil
it is simply ridiculous and even dangerous leaving some screen jockeys "buy" and "sell" paper barrels
or cubic feet of a stuff they have no intention to hold or use .

some speculation can be useful but the ratio of real users to mere speculators is just insane
how could a 2% change in demand /supply create price variation of 50% or more
it is downright an impediment on sound business
how to run a business whose time scale is in years when the trading is measured in milliseconds ?

short selling has been forbidden for shares on the stock market , the same should be done for futures
and a time delay of a couple of hours would stop this demonic churning

[Hawkcreek]

I can't see how giving more profit to an oil company will flow downstream to the consumers in lower prices. Typically, the companies just pocket the money. It''s not what something is worth, it's what you can get for it that matters to a corporation.
If I were an Exxon board member, and someone told me that we were going to make 50% more profit this year without spending another cent on exploration and drilling, I would just smile and pocket the cash.