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THE US Strategic Petroleum Reserve (SPR) Thread Pt. 2

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Selling half of the Strategic Petroleum Reserve

Unread postby Cog » Fri 26 May 2017, 09:07:12

That is not the purpose of selling off part of the SPR. Wapo is fake news. People who quote them have an agenda.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby ROCKMAN » Fri 26 May 2017, 09:19:14

Revi - A couple of relevant points. Despite the slogan the SPR provides nothing in the way of "energy independence" even in the short term. The US imports 300 million bbls per month. The SPR would struggle to deliver 4.4 million bbls per day posted rate..about 40% of our imports. So if we continually drained the SPR it would have no meaning impact on our "independence": we would still be dependent on 170 million bbls of oil imports per month.

And that irrelevant action would NEVER HAPPEN...the DoD would not allow it. What most of the public doesn't realize is that the bulk of the SPR is reserved for the US Dept of Defense...the single largest consumer of oil on the planet.

The SPR was designed to respond to SMALL disruptions of oil imports for short periods. If the SPR were continuously drained it would take 175 days. At the current rate in 175 days the US would import 1.8 BILLION BBLS OF OIL. So over the next 6 months instead of importing 1.77 billion bbls we would import 1 billion bbls. And then we would import 1.77 billion bbls of oil over the following 6 months. And then 3.6 billion bbls every following year. Feeling very "independent" yet? LOL.

IMHO the better value of the SPR is psychological and not practical. It gives the public a false sense of security that it immune from foreigners disrupting our oil consumption. And that leverage has cost the tax payers $28 BILLION + tens of $millions per year (according to the govt) in maintenance.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby AdamB » Fri 26 May 2017, 09:51:02

Cog wrote:That is not the purpose of selling off part of the SPR. Wapo is fake news. People who quote them have an agenda.


Boy is that a good way of putting it, for all sorts of "sources" of information used around here. This blogger said the world is ending!! OH NOES!!

A second of thought on some of the claims would cure a bunch of this early on.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Hawkcreek » Fri 26 May 2017, 09:52:35

Cog wrote:That is not the purpose of selling off part of the SPR. Wapo is fake news. People who quote them have an agenda.

Plus one on that .
At least it is becoming well known that most of the media pushes fake news.
Most of their "news" is either opinion pieces (lies) or pure propaganda.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby efarmer » Fri 26 May 2017, 10:05:52

Interesting Rockman, so the public fig leaf is knowing there is an SPR as a buffer against
supply shocks while the strategic reason is a military strategic reserve. It therefore seems
likely to me that the military, slated to get an augmented budget will quietly tell Mr. Trump
that he needs to leave the SPR alone for them, as he seems to have the layman's mindset
much as I had that it is for reducing consumer pain in supply shocks instead of a stock of
oil to allow military fueling for a short period of conflict.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Revi » Fri 26 May 2017, 11:00:31

It's only 16 billion and they are going to cut food stamps by something like 200 billion, so it is a drop in the bucket.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby ROCKMAN » Fri 26 May 2017, 13:08:55

Farmer - "...will quietly tell Mr. Trump that he needs to leave the SPR alone for them". Not sure they have to tell him anything...it's the Congressional law. I haven't found it again after poking around numerous time. But many years ago I found a govt reference that the CONGRESSIONAL LAW (and not the POTUS) that controls the SPR reserves 500 million bbls strictly for the use of the DoD. Which might sound unfair but given how the US military constantly deploys around the globe to remind other countries that we are THE super power it shouldn't come as a surprise.

And a bit of trivia: guess what US oil company supplies more fuel to the DoD? Whatever your answer it's wrong. It's a British company...BP.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby ROCKMAN » Fri 26 May 2017, 13:14:13

Revi - "...so it is a drop in the bucket." Yes. And I honestly don't see where any of the players get much benefit from it...real or illusionary. But a huge downside for the POTUS if we have to make a bug drawn down (weather or political related) after some is sold.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Revi » Thu 01 Jun 2017, 07:18:47

I agree. It would help to keep business as usual running for a while, but once it's gone we lose that buffer. It's going to be a bumpy ride from here on in. Interesting that a lot is for the military, so once we sell off half of it we really don't have a domestic strategic petroleum reserve. If it's martial law then the military gets all of it. Great...
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby AdamB » Thu 01 Jun 2017, 07:56:41

Revi wrote:I agree. It would help to keep business as usual running for a while, but once it's gone we lose that buffer.


Fortunate then that only a real oil emergency would ever cause that to happen. And we haven't seen one of those since the 70's, which is why the thing exists in the first place. The good news being that currently stockpiles outside of SPR are nearly as large, due to the current glut and overabundance of domestic supply and all.

Revi wrote: It's going to be a bumpy ride from here on in.


You always say that Revi. You were saying when what happened next was low prices and glut. That was sure a bumpy ride!! Just not in the direction that you appear to be hoping for.

Want to make a bet? From now until the day you die, you and I will have refined products when we want to buy them, in our respective home locations. If during any day between now and when you and I die, neither of us can buy fuel, you win the bet. If we both die, always having had fuel available, I win the bet. Our estates can exchange a check for $10, based on who won.

revi wrote:
Interesting that a lot is for the military, so once we sell off half of it we really don't have a domestic strategic petroleum reserve. If it's martial law then the military gets all of it. Great...


Conditionals with a microscopic possibility of happening are always good doomer porn starting points....like "if 2+2=5, then this must happen next.."
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby ROCKMAN » Thu 01 Jun 2017, 10:12:37

Revi - "If it's martial law then the military gets all of it." If you're referring to the SPR then no declaration of martial law is required. The SPR is owned by the federal govt. More important, it is administered solely by the feds. Anytime the govt decides it wants to reserve every bbl in the SPR for the DoD it already has the authority. It was specifically written as such in the original SPR regulations.

Of course, there might be political repercussions from the voters but they have no power to change the law. But they do have the power to change politicians. Of course, that would take a long time.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Revi » Thu 01 Jun 2017, 11:39:41

We are piling up an extra trillion in debt per year, so this 16 billion is just a small drop in the bucket towards that. I wonder what the real reason is for selling it?
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby AdamB » Thu 01 Jun 2017, 14:50:50

Revi wrote:We are piling up an extra trillion in debt per year, so this 16 billion is just a small drop in the bucket towards that. I wonder what the real reason is for selling it?


You don't like the "real" reason provided by your source?

"The administration said it expects the drawdown to reduce the federal deficit by $16.6 billion, part of a package of deficit reduction measures over the next 10 years."

Seems pretty straight forward to me, is there a need to turn it into a conspiracy?
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Revi » Mon 05 Jun 2017, 08:34:45

Maybe... Buy high and sell low. I think it's not a great move. Even Trump's budget puts us an extra trillion in the hole per year.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Cog » Mon 05 Jun 2017, 12:06:42

The average cost of the oil in the SPR is about $27/bbl. The cost of WTI oil right now is about $48. Do the math. Its buying low and selling high.

Technically the federal government never bought the oil that is in the SPR to begin with. Its payment in royalties for offshore drilling on federal land on the outer continental shelf. But I wouldn't expect you to go to the SPR website like I did to verify all this. Reading is for suckers.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby ROCKMAN » Mon 05 Jun 2017, 13:18:15

Adjusted for inflation and including the construction cost the govt says the current cost is around $76/bbl if my memory is good. :x Which does not include the interest on US bonds that financed the SPR.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Cog » Mon 05 Jun 2017, 13:44:38

ROCKMAN wrote:Adjusted for inflation and including the construction cost the govt says the current cost is around $76/bbl if my memory is good. :x Which does not include the interest on US bonds that financed the SPR.


The memory of the government on the SPR website is different than yours.

Don't make me post the link to the SPR website. Something anyone can find in five seconds. It only feeds the too long didn't read drones that inhabit this board.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Revi » Thu 08 Jun 2017, 07:43:19

Whatever your political persuasion, it seems like a bad decision to me to sell a real asset. I wonder if it was a demand of our creditors? We owe a lot of "money" to a lot of people, and they will demand some kind of collateral eventually.

It would be interesting to see where the oil goes to.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby ROCKMAN » Thu 08 Jun 2017, 08:05:52

Revi - "We owe a lot of "money" to a lot of people, and they will demand some kind of collateral eventually." In reality the little bit of economic stability (mostly psychological) the SPR provides to our bond holders is more important. And those bond holders known that a relatively stable US economy is their best "collateral".

FYI: US bond owners don't want the country to every stop refloating our debt. Otherwise they would not have bought the debt in the first place.
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Re: Selling half of the Strategic Petroleum Reserve

Unread postby Revi » Thu 08 Jun 2017, 08:18:30

I agree. The fact that we keep paying the interest is the important part, and the idea that they have their money parked in a safe place for the time being. They don't want a bunch of physical oil. Maybe we are doing this to give the impression that we are spending less money. If we sell some of the SPR it looks like we are being fiscally responsible and that way we can borrow more against the future. Like pawning some jewelry so we can pay some of the mortgage and keep the house for another month.
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