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Page added on July 4, 2018

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Trump May Tap Strategic Petroleum Reserve To Lower Prices At The Pump

Trump May Tap Strategic Petroleum Reserve To Lower Prices At The Pump thumbnail

As Independence Day approaches, AAA reports that a record-breaking 46.9 million Americans will travel 50 miles or more away from home, an increase of more than five percent compared with last year – the highest number since the travel agency began tracking the numbers 18 years ago. One of the biggest scuttlebutts in offices around America because of this is rising gas prices, which typically dampen the gleeful holiday travel feeling.

In the past, then-candidate-now-President Donald Trump has commented on rising U.S. gas prices and the “artificially” high increases from OPEC nations. Once Trump said, “Nobody in Washington sits back and said (sic) ‘You’re not gonna raise that f******’ price.’” Well, what are you going to do Mr. President?

Trump has been criticizing OPEC for artificially inflating prices by cutting down on production during worldwide peak usage. As oil prices have skyrocketed since April and May to their highest in three years, and with the midterm election season in full force, the President will most likely decide to tap into the Strategic Petroleum Reserve (SPR) to get prices down for the length of the summer driving season.

Although it can be seen as somewhat of a political move to boost his popularity to help Republicans nationwide, he is correct about artificial prices and is doing something to mitigate their affects.

“Prices are high,” said Rob West, an analyst at London-based research firm Redburn, according to the New York Times. Noting that Trump does have a point, he added, “I do see some artificiality in the prices we see today.”

As the supply gap closes and shortages are on the rise worldwide, higher oil prices, left untouched, are inevitable. Following Trump’s removal of the Iran Nuclear Deal and building a coalition of allies not to buy Iranian oil, the Trump administration has aggressively pressed Saudi Arabia to boost output to offset declines from elsewhere in the Middle East. In a report from Oil Price, Saudi Arabia has complied, promising to ramp up output to about 11 million barrels per day in July, up from less than 10 million barrels per day in May.

Although the rate of production is an astronomical increase, it is unclear that even a massive one million barrel per day increase from Saudi Arabia and OPEC nations will be enough to fill the worsening supply gap. Outages in Canada, Libya, Angola, and over half a dozen countries may overwhelm production in Saudi Arabia.

All of this and the fast-increasing prices of West Texas Intermediate (WTI) and Brent Crude raise the likelihood that President Trump will turn to SPR to thwart higher prices at the pump.

“We think that WTI would not have to advance much further before [SPR] is brought into play,” banking services giant Standard Chartered wrote. “Higher gasoline prices, particularly in the Midwest, are likely to provoke a SPR release in the run-up to November’s mid-term elections.”

The motive of SPR only being used in the event of a national crisis has become more of misnomer in recent years – all due to a surge in U.S. oil production and a big cut in net imports. Congressionally approved sales of SPR years ago have taken out the hurt of a formerly politically dangerous move.

The move will push prices down to make Americans happy which may also increase favorability among the President and the members of his party amidst a particularity contentious election year for the House and Senate.

therepublicanstandard



22 Comments on "Trump May Tap Strategic Petroleum Reserve To Lower Prices At The Pump"

  1. Duncan Idaho on Wed, 4th Jul 2018 7:44 pm 

    The Orange Lout has spent too much time being a TV host and real estate developer.
    I thought the 4 bankruptcies would bring some analysis– but no education.

  2. deadly on Thu, 5th Jul 2018 7:20 am 

    Anybody who can earn enough income to own and drive an automobile shouldn’t complain about the price of gasoline.

    They should reduce their consumption by two dollars each day and mail two dollars to any poor soul in India or Pakistan.

    If you save two dollars each day, it is 730 dollars at the end of the year. On second thought, anybody with 730 dollars better hang onto it. You’re going to need gas money and more will be needed, just like it always is.

    In America, 730 dollars is less than 2 dollars in India or Pakistan.

    Trump wouldn’t give a beggar anywhere a dime, you have to know that.

  3. Bob Jones on Thu, 5th Jul 2018 8:10 am 

    The United States is going to crash before gasoline gets above $4/gallon.

    The way it is built, with the malls, interstates, 1000-mile Caesar salads, bullshit jobs, using credit cards to buy food, SUVs, and drive-thrus, it is only a matter of time before the next crisis humbles the average American idiot and gas prices fall back under $2.80/gallon.

    Americans are WAY TOO UN-PRODUCTIVE to keep the American lifestyle for more than another 5 years. Better stock-up while you can.

  4. CAM on Thu, 5th Jul 2018 8:14 am 

    I would guess that the fracking industry is none to happy about the attempt to curb oil prices. They need significantly higher prices to even hope to be profitable. Fracking may take a big downward turn long before anyone suspects it will happen.

  5. MASTERMIND on Thu, 5th Jul 2018 8:32 am 

    Viral footage shows a man throwing a drink in a teenager’s face after taking his MAGA hat in a Whataburger

    http://www.businessinsider.com/whataburger-video-shows-maga-hat-stolen-drink-thrown-2018-7

  6. Antius on Thu, 5th Jul 2018 9:08 am 

    I pray that this is just idle speculation and that he doesn’t actually do it. The strategic reserve was created to protect the US military against catastrophic supply shortages. Using it to keep consumer prices down would appear to be terribly short sighted. Does anyone in the Trump administration understand energy economics?

  7. TurningPoint on Thu, 5th Jul 2018 9:26 am 

    Although I think it’s a bad idea to tap the SPR when there is no crisis, I do remember the Obama Administration did the exact same thing toward the end of his Presidency. There was no crisis when he did it either. It was well after the economic collapse of 2008

  8. Chico on Thu, 5th Jul 2018 9:54 am 

    CAM,

    I agree with you. My operators are saying that the frac scheduling is getting soft. Not enough pipeline capacity.

  9. BobInget on Thu, 5th Jul 2018 9:58 am 

    In 2011 the SPR was at its full capacity of 727 million barrels, comprised of 293 million barrels (40.3%) of sweet and 434 million barrels (59.7%) of sour. Reference BRY post 74272 dated 6/25/11.

    So in the last seven years, the SPR has been reduced by 9.2% to 660 million barrels, comprised of 254.6 million barrels (38.6%) of sweet and 405.4 million barrels (61.4%) of sour. Sweet has been reduced by 38.4 million barrels (13.1%) and sour has been reduced by 28.6 million barrels (6.6%).

    Despite all the talk of the SPR getting “sweeter” it is actually doing the opposite.”

  10. tommytommywantshismommy on Thu, 5th Jul 2018 10:23 am 

    Wow…Gasoline isn’t even that expensive. Still under $3 around here. This does not make much sense to me unless the economy is far worse then what is being portrayed. I thought this oil was for when grandma can no longer get gasoline to drive to her mailbox in her buick?

  11. Rich Diana on Thu, 5th Jul 2018 10:28 am 

    President Grifter having been given the keys to the entire “free” world can’t resist a little nostalgic trip to past behaviors by selling a bit of snake oil.

  12. rockman on Thu, 5th Jul 2018 10:28 am 

    TurningPoint – “I do remember the Obama Administration did the exact same thing toward the end of his Presidency. There was no crisis when he did it either.” Your memory is wrong. This is what President Obama did during the end of his term and why he did it: “Sept 2012 – exchanged 1 MMB with Marathon Oil following Hurricane Isaac due to disruptions to the commercial oil production, refining and distribution operations in the Gulf Coast.”

    https://www.energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve/spr-quick-facts-and-faqs

    And note: this was an exchange and not a sale. Marathon was required to replace that oil after a short period of time. Which it did. Regardless just 1 million bbls would have no significant impact on oil prices.

    The above link has many SPR FACTS unlike so many of the bullshit OPINIONS floating around. One critical FACT for instance:

    “(B) action taken….would assist directly and significantly in preventing or reducing the adverse impact of such shortage”
    then the Secretary (of Energy) may drawdown and distribute the Strategic Petroleum Reserve, although in no case:

    “(1) in excess of an aggregate of 30,000,000 barrels….
    (2) for more than 60 days….”
    (3) a reduction to less then 500 million barrels”

    This is a portion of the CONGRESSIONAL LAW that established the SPR. The LAW also forbids any politician (POTUS or Congressman) from releasing or selling SPR reserves to specifically affect the price of oil. Written that way to prevent using the SPR for political gain by anyone. No: the POTUS does not the ability to change any congressional law. It can only be amended by a full vote of Congress.

    There are way too many bullshit ideas about what could and couldn’t be done with SPR oil reserves. Such as it can be reduced below 500 million bbls. Why? It violates the actual purpose of the SPR that very few realize: that 500 million bbl is for the Dept of Defense…the single largest consumer of oil on the planet.

  13. GregT on Thu, 5th Jul 2018 10:35 am 

    “One of the biggest scuttlebutts in offices around America because of this is rising gas prices, which typically dampen the gleeful holiday travel feeling.”

    Because it’s all about feelings. What good is circus, without an abundance of bread?

    All Hail Donaldus Trump!

    Long live God-Emperor Trump!

    https://www.newyorker.com/news/news-desk/the-alt-right-hails-its-victorious-god-emperor

  14. deadly on Thu, 5th Jul 2018 10:54 am 

    On November 11, 2016, the price of oil was 43.50 USD.

    Eighteen months later, the price is 78.33 USD.

    President Trump has managed to increase the price by 35 dollars per barrel just by being elected to the presidency and yet blames the Iranians. Throws rocks at windows and blames the shop owner for having breakable windows. Then the price of windows will be too high and Trump will blame glaziers. Then Trump will place a tariff on window glass. You name it, Trump is behind it all. lol

    Anybody is to blame except for Trump, harumph.

    Seems like Trump is the only one complaining and seems like he is the one responsible for the price increase too.

    President Chump doth protest too much.

  15. Dave Thompson on Thu, 5th Jul 2018 5:28 pm 

    Using the oil in the strategic reserve to lower prices has the feel and look of a fools errand. A temporary fuel price drop of what five or ten cents a gallon? And what about the hue and cry of not interfering by the government of the open and free market forces that supposedly keep the whole shebang in order and check?

  16. Duncan Idaho on Thu, 5th Jul 2018 6:20 pm 

    Does anyone in the Trump administration understand energy economics?

    Trump is a former TV host and has been bankrupt 4 times.

    He is a hustler—–

  17. Boat on Thu, 5th Jul 2018 7:41 pm 

    Rock

    Nice post.

  18. DMyers on Thu, 5th Jul 2018 9:09 pm 

    Inside Trump Conversations

    Trump: “Look this ain’t nothin’ but supply and demand. We need a little more supply. Open the Strategic Reserve and scoop up a little for the pot.”

    Advisor: “I don’t think we can do that. Without,…you know,..talking to Congress.”

    Trump: “Look, I want my people, the people that love me, to be able to buy some cheap fuckin’ gas. So, we’re gonna make that happen.”

    Advisor: “Yes sir.”

    Trump: Crank up the Oil Reserve, and pour some fuckin’ oil into the market. Supply, supply, supply. That’s how you do it.”

  19. Cloggie on Fri, 6th Jul 2018 12:51 am 

    China talks about “largest trade war in history”:

    http://www.spiegel.de/wirtschaft/soziales/handelsstreit-us-strafzoelle-gegen-china-in-kraft-a-1216949.html

    No end to the escalation in sight. The anti-globalist Trump is determined to rebuild American industry and as such defend the interests of his voter base, now that the US has (temporarily) lost the competition on world markets. Maximization of trade is no longer of prime importance. Important is balanced trade. And keeping your industries within your own border.

  20. BobInget on Fri, 6th Jul 2018 12:13 pm 

    Big oil is sowing the seeds for a ‘super-spike’ in crude prices above $150, Bernstein warns
    Oil prices could top all-time highs as energy companies invest too little money in new production, Bernstein Research warns.
    The underinvestment could cause a super-spike “potentially much larger than” $150 a barrel.
    Reinvestment in oil reserves is the lowest in a generation, while the amount of time those reserves will last has shrunk since 2000, according to Bernstein.

  21. DerHundistLos on Fri, 6th Jul 2018 8:23 pm 

    The ONLY reason Dump is drawing down the SPR is due to his big mouth. When oil prices were down, Dump bragged constantly that he was responsible for lower oil prices. Now that prices have moved in the opposite direction, Dump is desperate to do anything .

  22. rockman on Sat, 7th Jul 2018 10:42 am 

    It never ceases to amaze me how many think the POTUS has any control over the price of oil. The price of oil is, and always will be, controlled by what the refineries are willing to pay for oil. And the refineries estimate that price based upon their projections of what consumers will be willing/able to pay in the near future. Which will be based upon the dynamic between oil prices and economic strength. Neither of which is directly controlled by any POTUS or oil exporting country. The entire oil futures market is what investors project for the price of oil based upon those factors with a big dose of short term instability and rhetoric from producers and politicians. Which is why countless $BILLIONS are continuously won/lost on oil futures investments.

    If the price of oil (and those factors that control it) were readily predictable there would be no oil futures market to invest in since everyone would have the same projection.

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