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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: 60 mb release from SPR and other nations storage!

Unread postby Ferretlover » Thu 23 Jun 2011, 18:43:39

Similar threads (SPR) merged with this one.
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Re: Global Oil Reserves Tapped in Effort to Cut Political Da

Unread postby Bill Hicks » Thu 23 Jun 2011, 20:02:52

ColossalContrarian wrote: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.
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Re: Global Oil Reserves Tapped in Effort to Cut Political Da

Unread postby Plantagenet » Thu 23 Jun 2011, 22:00:17

wrote:Drill Baby Drill.


Release Baby Release. :roll:
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Re: 60 mb release from SPR and other nations storage!

Unread postby Keith_McClary » Thu 23 Jun 2011, 23:08:32

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
Last edited by Keith_McClary on Thu 23 Jun 2011, 23:51:18, edited 1 time in total.
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Re: 60 mb release from SPR and other nations storage!

Unread postby TheDude » Thu 23 Jun 2011, 23:36:40

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
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Re: Global Oil Reserves Tapped in Effort to Cut Political Da

Unread postby ColossalContrarian » Thu 23 Jun 2011, 23:56:40

Bill Hicks wrote:
ColossalContrarian wrote: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.
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Re: Global Oil Reserves Tapped in Effort to Cut Political Da

Unread postby vision-master » Fri 24 Jun 2011, 08:13:59

evilgenius wrote: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.


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Re: 60 mb release from SPR and other nations storage!

Unread postby Sys1 » Sat 25 Jun 2011, 09:07:20

This is doing the exact OPPOSITE of what should be happening, in terms of the markets sending the correct price signals to energy consumers.

I'm going to pick on the U.S. here, since we have a terrible gas tax policy compared to the first world overall.

If Obama is going to inject 30 million barrels of liquidity into the U.S. when things (oil prices and/or the economy) get a little inconvenient, it just hastens the day oil gets even more expensive due to people making brilliant decisions like buying high mileage vehicles because they are "more convenient".


You are right but... as we are in a global economy, the oil not used by a country will make oil less expensive for another. We have a global economy but not yet a global policy regarding energy or ressources. Using SPR to ease oil price is like printing money to ease debts. You earn time, but this time will have to be paid back in a very tough way.
There should be a global meeting, a kind of energy G20 in order to reset the way our economy works. It's our only hope to mitigate the end of cheap oil.
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After 30 days of releasing oil then what?

Unread postby babystrangeloop » Sat 25 Jun 2011, 18:40:10

I was thinking the very phrase "bridge to nowhere" yesterday and then today I found this:
Government Controlled Oil Stocks
Early Warning / June 24, 2011


IEA wrote:the IEA warmly welcomes the announced intentions to increase production by major oil producing countries. As these production increases will inevitably take time and world economies are still recovering, the threat of a serious market tightening, particularly for some grades of oil, poses an immediate requirement for additional oil or products to be made available to the market. The IEA collective action is intended to complement expected increases in output by these producing countries, to help bridge the gap until sufficient additional oil from them reaches global markets.

I don't know - maybe Saudi production will indeed increase, and this release from the SPR is a bridge to somewhere. It's going to be very interesting to watch the next few months of statistics. But there are sure a lot of strange loose ends here that don't seem easy to unravel. If it turns out to be a bridge to nowhere, then there are going to be hard choices between stopping the flow of oil (thus sharply raising prices again), or continuing to drain the strategic reserves for an indefinite length of time.

The end of the thirty days of releasing oil will be very interesting indeed.

Isn't it funny how the start of the release is timed for the end of QE2?
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Re: 60 mb release from SPR and other nations storage!

Unread postby Bill Hicks » Sat 25 Jun 2011, 22:18:58

rangerone314 wrote:
Pops wrote:No president since WWII has been re-elected with greater than 7.2% unemployment.

It is HIGHLY unlikely that we will get below official 7.2% unemployment by election time.



If the election were held today, Obama would win easily despite UE being well over 7.2% because he is running against a collection of zealots, charlatans and fools on the Republican side who have absolutely no answers for what ails us. He'd also largely get a pass on UE because many still think of it as a hangover from Chimpy Bush's tenure.

Now then, if there is another major market crash before November 2012 and the economy goes back into free fall, all bets are off...and I put the chances of that at better than 50-50. 8O
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Re: 60 mb release from SPR and other nations storage!

Unread postby quadzillajim » Sat 25 Jun 2011, 22:47:51

Pops wrote:I kinda think O has pulled all the levers he's got and nothing has worked.

I think I heard some head say no president has been reelected with unemployment this high. Whether this is a transparent election ploy or legitimate plan to stimulate the economy, the country is hurting for jobs and he'll get the blame.

Unfortunately for whoever came up with this lever, the banker will again get the benefit. A contango has already set up after the futures market had been flat (near month at the same price as the 11 month) so traders are in effect buying the government subsidized cheap oil and storing it to sell after the release is complete.

http://www.businessinsider.com/contango ... ase-2011-6


There's always the boots on the ground start a new war lever. We always re-elect a president if we have just gotten into a new boots on the ground war.
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Re: 60 mb release from SPR and other nations storage!

Unread postby Sixstrings » Sat 25 Jun 2011, 22:50:10

basil_hayden wrote:Road Trip!


Yup, fire up the gas-guzzling RV and party like it's 1999.
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Re: 60 mb release from SPR and other nations storage!

Unread postby Sixstrings » Sat 25 Jun 2011, 22:56:37

rangerone314 wrote:No president since WWII has been re-elected with greater than 7.2% unemployment.


True.. but Obama's policies have been globalist free trading, pro Wall Street, pro-rich corporatist Republican policies. Yes Obama's Republican policies have failed.. so you think the voters will just elect an even more radical Republican?

We have no choice in the next election, it's moderate Republican Obama or a radical far right Republican. Or Mitt Romney, who's essentially Obama's clone. There's not a bit of difference between the two, Obama even passed Romney's health plan for Pete's sake. Romney was an investment banker.. versus Obama who wines and dines investment bankers, and appoints them all over his administration.

What choice do we have? How would Romney be different from Obama? I guess only thing Romney could do to out-Republican Obama would be double down on the Bush tax cuts or something. There's really not much for Romney to do, Obama's been such a good Republican -- Bush tax cuts check, more free trade deals, more war, Wall Street giveaways, Romneycare... honestly the Republicans just need to nominate Obama. :|
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Re: 60 mb release from SPR and other nations storage!

Unread postby Sys1 » Sun 26 Jun 2011, 01:36:06

Using non renewable ressources to build an entire civilisation is also a bridge to nowhere. A very high bridge, a cliff for human lemmings.
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Re: 60 mb release from SPR and other nations storage!

Unread postby peripato » Mon 27 Jun 2011, 05:22:48

Sixstrings wrote:
basil_hayden wrote:Road Trip!


Yup, fire up the gas-guzzling RV and party like it's 1999.

This release of less than one day's worth of global consumption was done in an environment of record inventories and falling demand (hmm, I wonder if the two might be linked in some way?). Prices were already on the way down, this action is just a stunt to cover the fact that the US and by extension, world economy, is slowly but surely sinking back under the mire and that the Great Recession Part Deux would have caused the oil price to drop anyway.

There is no "road trip" for the US and global economy going forward. Instead of a party, there will be a wake, as the black hole that was the old FIRE economy sucks more and more people, businesses and ultimately countries into its bottomless pit of deflation. In fact this process will only accelerate as it builds momentum.
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Re: 60 mb release from SPR and other nations storage!

Unread postby basil_hayden » Mon 27 Jun 2011, 07:04:55

peripato wrote:
Sixstrings wrote:
basil_hayden wrote:Road Trip!


Yup, fire up the gas-guzzling RV and party like it's 1999.

This release of less than one day's worth of global consumption was done in an environment of record inventories and falling demand (hmm, I wonder if the two might be linked in some way?). Prices were already on the way down, this action is just a stunt to cover the fact that the US and by extension, world economy, is slowly but surely sinking back under the mire and that the Great Recession Part Deux would have caused the oil price to drop anyway.

There is no "road trip" for the US and global economy going forward. Instead of a party, there will be a wake, as the black hole that was the old FIRE economy sucks more and more people, businesses and ultimately countries into its bottomless pit of deflation. In fact this process will only accelerate as it builds momentum.


Certainly you are correct, Peripato; but just like November 2009 there is a small window to load the Honda and do some family camping. The low prices should be fully kicked in by the end of July so it'll be perfect timing once again. I find it odd that the President is acting on his own without Congress quite a bit lately, in apparent fits of desperation. So it's likely that the light at the end of the tunnel is a train coming the other way.
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Re: 60 mb release from SPR and other nations storage!

Unread postby GoIllini » Tue 28 Jun 2011, 06:50:33

peripato wrote:This release of less than one day's worth of global consumption was done in an environment of record inventories and falling demand (hmm, I wonder if the two might be linked in some way?). Prices were already on the way down, this action is just a stunt to cover the fact that the US and by extension, world economy, is slowly but surely sinking back under the mire and that the Great Recession Part Deux would have caused the oil price to drop anyway.

There is no "road trip" for the US and global economy going forward. Instead of a party, there will be a wake, as the black hole that was the old FIRE economy sucks more and more people, businesses and ultimately countries into its bottomless pit of deflation. In fact this process will only accelerate as it builds momentum.

So it sounds like you're saying the fed should print money to pay off the debt and that we're facing deflation rather than hyperinflation. I'm taking away your doomer card. :mrgreen:

Certainly you are correct, Peripato; but just like November 2009 there is a small window to load the Honda and do some family camping. The low prices should be fully kicked in by the end of July so it'll be perfect timing once again. I find it odd that the President is acting on his own without Congress quite a bit lately, in apparent fits of desperation. So it's likely that the light at the end of the tunnel is a train coming the other way.

Honestly, I think it's a diplomatic move, coordinated with the IEA, to try and scare Iran. The former CEO of Royal Dutch said 60 million barrels of oil has very little impact on oil prices.

My target oil price for the end of the year is $100-$110. Oil prices will remain high and remain the limiting factor on the economy, but it doesn't mean we're going into a crash. Just more stagflation, doom and gloom, etc until we move on to a better energy technology.
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Re: 60 mb release from SPR and other nations storage!

Unread postby John_A » Tue 28 Jun 2011, 07:19:43

GoIllini wrote:My target oil price for the end of the year is $100-$110. Oil prices will remain high and remain the limiting factor on the economy, but it doesn't mean we're going into a crash. Just more stagflation, doom and gloom, etc until we move on to a better energy technology.


$100-$110 sounds fair for both producers and consumers. I don't know if any new energy technology is required, rearranging job/home locations in a more bicycle friendly configuration alone would allow Americans at least to use way less crude in their commuting.
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Re: 60 mb release from SPR and other nations storage!

Unread postby GoIllini » Tue 28 Jun 2011, 07:57:43

John_A wrote:
GoIllini wrote:$100-$110 sounds fair for both producers and consumers. I don't know if any new energy technology is required, rearranging job/home locations in a more bicycle friendly configuration alone would allow Americans at least to use way less crude in their commuting.

It's happening. A recent survey by the NAR suggested that folks are looking at transportation options as a major factor in buying homes.

I think it's clear at this point that the days of Robert F. Moses where folks live far out in the suburbs with a 30 miles commute by car and spend an hour sitting in traffic waiting to cross the Henry Hudson Bridge are over. We're moving towards an economy where folks still have cars but don't necessarily need them. People will still live out in the suburbs just like they did in the late part of the 19th century/first half of the twentieth, but probably more within walking distance or within a few miles of a bus stop or train station. And it turns out they're finding it's more convenient to get to work, rather than less. As a moderate libertarian with a green streak, I find it interesting that the liberals of the 1950s and 1960s caused so much environmental and social damage trying to separate peoples' homes from their workplaces.

We are experiencing our bumpy transition to a world that Ehrlich would be a little more comfortable with. But I think in 20 years, we're going to find that we like this new normal a whole lot more than the old normal of spending billions of dollars to pave over communities to build congested roads. Even before we got hit with high oil prices, we kinda knew this was never a perfect system.
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Re: 60 mb release from SPR and other nations storage!

Unread postby kildred590 » Sun 31 Jul 2011, 10:11:05

Saudi Arabia was recently trash-talking Iran, talking about how the Saudi's would raise output to decrease prices to hurt Iran. though how hurt would Iran be, with 100 billion barrels ?

The country is already experiencing a lot of social unrest due to high food prices. At the same time, it's also funding Hezbollah and a government crackdown in Syria. Perhaps Iran is overextended.


Ermm, no.
The Syrian government is Ba'athist (like Saddam Hussein). They are deeply loathed by the Iranian Islamic Council. They are also Sunni and Arab, while Iran is Shia and Persian.
Probably not a good idea to get your information form The Jerusalem Post.


--------
$100 a barrel seems to be some sort of ceiling.
The $150 spike only lasted a few weeks and was driven by easy credit.
Chinese inflation is going to stop that, as the Chinese government restricts credit to control inflation.
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