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Stop Filling U.S. Oil Reserves?

Today members of Congress will press President Bush to halt purchases of crude oil by the Strategic Petroleum Reserve in a bid to do something – anything – to tamp down crude oil prices, which have doubled in the last year. The reserve, created in the aftermath of the 1973-1974 oil embargo, has been quietly stockpiling oil in the Louisiana Salt Caverns for three decades, with only a handful of pauses. Bush says the amount of oil being purchased by the strategic reserve – about 70,000 barrels a day – is too tiny to make any difference in oil prices. But members of Congress, including 16 Senate Republicans, say it’s worth a try.

How did a suspension in purchases by the Strategic Petroleum Reserve become a cause célèbre in Congress?

The idea has originated in large part with the Aspen, Col.-based oil consultant Philip K. Verleger. An economist, Verleger was director of the Office of Domestic Energy Policy at the U.S. Treasury under President Carter and later a lecturer at Yale University. He has been an independent consultant for some time and a provocative analyst of oil markets. For months, he has been advocating a halt in the strategic reserve purchases, which he said take the most desirable, easy-to-refine light crude oil off the market at a sensitive time for supplies. The purchases directly affect demand for the oil used as a benchmark by the closely-watched New York Mercantile Exchange. Verleger has also suggested that the Strategic Petroleum Reserve could sell some of its light crude oil and buy the same amount of cheaper, lower quality heavy crude oil, which can be used by some but not all U.S. refineries.

How much a suspension of strategic reserve purchases would sway price is a matter of dispute. Though the Strategic Petroleum Reserve purchases account for 0.3 percent of demand for that grade of petroleum, Verleger testified that it could add 10 percent to the price of light sweet crude oil on the New York Mercantile Exchange. Today House Speaker Nancy Pelosi put out a press release noting that Bush did in fact halt additions to the SPR in 2006 to blunt the rise in prices. But Bush now says that the oil bought by the reserve amounts to less than 0.1 percent of world oil demand.

If the purchases seem like a drop in the bucket of world demand, they also represent a drop in the bucket of the Strategic Petroleum Reserve, which currently has 701.3 million barrels, equal to 52 days of all U.S. petroleum imports. On Jan. 23, 2007, Bush announced plans to expand the reserve to 1.5 billion barrels.

Sen. Byron L. Dorgan (D-N.D.) has been rallying lawmakers’ support since March. “All of us feel very strongly that it makes no sense at all for the administration to be taking action to put upward pressure on prices when the SPRO is 90 percent filled,” Dorgan told me.

***
UPDATE: May 13th, 1:58pm: The Senate voted this afternoon to suspend oil deliveries to the country’s Strategic Petroleum Reserve until crude prices fall below $75 a barrel. The measure cleared the Senate in a 97-to-1 vote as part of a flood insurance reform bill.

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Comments (67)

James Wilson:

I can't believe some still blame Enviormentailst.
Who are the largest supporters of the Enviormentalist you love to hate? Big Oil and other large corporations thats who.
These large corporations use the Enviormentlist to get things they want like Barrier to Entry Laws that grandfather in the existing corportaions and their use of old technology while it reuqires new businesses that would compete with the old businesses to use all new expensive technology.
In other word the very corporation who are supporting are using the Enviormential to stiffle competition and control the market.

Tammi:

I like how the majority of posts say ignore the environmentalists it's their fault that the price of oil is so high. Ha blame the ignorance of the government and the people that have put them in office. Thirty years ago the oil crisis should have been a wake up call but no we are Americans so we deserve to have what we want.
Such as Bush's mandate that cars increase fuel mileage by 1 mile per gallon by 2010. Whoop de doo!! That one mile will sure help fuel consumption. The thing to do is find alternative fuels and get off the dependence of oil. I also think that building nuclear plants are not the answer unless you have a means of reusing the huge amount of nuclear waste that is generated. Of course we may not have to deal with that waste but our children and grandchildren will be left with the legacy of what to with it. But I'm sure that a lot of the public would say that is their problem, let them deal with it as long as we don't do without now.

G :

How does this affect the picture?
Costofwar.org
Morally?
nomorevictims.org

Mark:

I'm wondering if the price of oil produced here in the u.s is 125 dollars a barrel.

pappy:

I hope the price of gas goes to $6 per gallon so I can hear all liberals cry for their failed policies. Yes you environmental nut cases are the reason for not opening up anwar and increasing our domestic production of OIL by 20%. I blame you! how many of you liberals have even visited anwar? Zero probably. Lets get our heads out of our ---- and get with the program. Lift restrictions on refinery starts and oil drilling.

Barry O'Toole:

If someone had suggested, only a few years ago, that the price of a barrel of oil would reach $50, I would have laughed. Over $125 now, it will continue to rise. At this point I won't be surprised if petrol is $6 a gallon by the year's end.

So what would the current remedy of not diverting the oil to the SPRs do? Nothing. The amount is less that 1% of the consumption, and any relief will be erased by the increasing price of crude. Like a tax-holiday, as proposed by Clinton and McCain, this is just a political gimmick.

Alan Browne:

"this is one little thing we can do, and I think we should go ahead and do it," said Sen. Dominici of NM regarding his vote to stop filling the reserve.

It amounts to less than 0.1% of worldwide daily consumption and thus will have no effect on the price of oil.

"little" indeed. It is time for the US to adpt BIG strategies to attack oil consumption. And this begins with the automobile.

The new CAFE standard would not be a bad start if only it were faster. Waiting until 2020 to completely implement the new standards is silly in the face of the danger to the economy.

The new standard could be substantially implemented in the first year (2011).

bud:

the reason oil cost so many dollars is because the dollar isn't worth anything

Tax big Oil?:

No business pays taxes, they pass them on to their customers in price increases. Increase taxes on oil co.'s then gasoline and diesel prices will increase to cover the tax. The Demo's love to fool people by saying, by all means tax those "excess profits." The consuming public will wind up paying the tax, as always.

artforhumans:

In ten years, the US economy could be completely Oil-free. Who benefits from our not doing this?

William Lane :

The real question is why are we spending taxpayer dollars to put oil in the ground in the first place. I worked at the Department of Energy in the 1970's when the Strategic Petroleum Reserve was conceived. Phil Verleger, who is mentioned in the article was around at that time as well -- though not at DOE. The idea for the SPR was to have the government do something that would protect against oil cutoffs by foreign countries, but be cheaper than all of the other plans that were floating around at that time (spending billions on coal gasification, shale oil, etc.). However, the flaw in the policy is this: It was based on the notion that the Arab oil embargo of 1973 was responsible for the gas lines of that year. In other words, it was based on the notion that there is a difference between an oil shortage that just results in high oil prices and one that results in a "physical shortage" of oil. The SPR was sold as a protection against the latter, and that seems to be how this administration still thinks about it. The problem, though, is that the Arab embargo did not cause the gas lines. U.S. Government price controls on gasoline caused the gas lines in both 1973 and 1979. (They had help from Government allocation rules in '79.) There really cannot be any such thing as a "physical shortgage" of oil caused by a cutoff of foreign supplies; oil is a fungible commodity. All there can be is higher prices. So all we're doing by building the SPR is paying slightly higher prices for oil year after year (slightly higher than what in any event would be a rising price), and spending a lot of taxpayer dollars to do that, just to protect against the possibility that we MIGHT in the future have to suddenly face a sudden price spike for a short period. To me, there is no public policy rationale for doing that, especially when the SPR is already more than large enough to completely replace any reasonably foreseeable shortfall for more than a year. So don't just stop buying for SPR temporarily; end the purchase program.

Karl:

Sell the Hummer? If you sell the Hummer the buyer will drive it.

Oy!:

Raise the Gas/carbon tax!
No more oil bing made, it's a finite resource.
Use it for moving cars, or burning to make electricity, and there's less for making plastics for medical devices, etc in the future.

Tax It! Use the funds to support the infrastructure, to make mass transit cheaper and more available, for discovering alternate technologies, to subsidize the existing solar and wind and tide and river flow methods, and maybe even pay down the debt. And to rebate back to folks and businesses that truly need the help.
At least some of the profits would be diverted from Big Oil and Gas, and from OPEC.

Murphy:

The real threat to our economy is not high energy costs, but rather too much central planning. The government hijacked the housing market in the early 2000's, and look at the mess they created. Now they think they can control the price of oil by tampering with the commodity markets and raising taxes on oil companies and investors. Good luck. All OPEC has to do to maintain the price is cut production a little.

Economic reality, that is supply and demand, has a way of asserting itself. If the government doesn't allow more domestic drilling and/or stop the immigration flood, then oil will continue its inexorable rise.

Marxism is not the solution. I don't know of any prosperous Marxist economies.

Westexacan:

There is plenty of oil off the coast of Florida but the big money people living there don't want that old oil messing up their water front properties. Was alright to mess it up for Texas and Lousiania , but not their pretty white sand. It is not the oil or the refineries but the speculators. Of course the oil companies are making high profits.
People , we are in trouble. I am old and I remember the great depression and we are heading there fast. Kick the politicians out.

allentown:

Drilling in ANWR and off-shore areas is fine, but realize that meaningful new oil production will be about 10 years into future and that it is likely to do no more than balance reduction in production from other aging US oilfields. US production has declined for a reason, the cheapest, largest, easiest to develop fields are discovered and in use. For the US, though not yet the world, we have passed Hubble's peak oil date and production indeed peaked.

Drilling ANWR has to be coupled with a grand compromise to address the energy problem, since more drilling is about all the oil companies and Republicans support. We badly need more conservation and that is the quickest way to reduce oil imports. Today, Americans use twice the energy per capita as Europeans, for about the same standard of living. The comparison to Japan is worse. We also need other energy sources, more nuclear plants, wind, solar, geothermal, clean coal.

All this stuff needs to move as a package to get political agreement. Detroit needs to make more fuel efficient cars than even the new standards will require. That has always been a hard sell.

More new refineries really isn't the answer. Oil companies have increased refinery capacity over the past two decades by expanding and debottlenecking at their existing refinery sites. The refineries are not running at full capacity. More refineries would simply shift the balance between imports of crude and refined products, a fair amount of which now comes from Carribean refineries.

Not filling the strategic reserve should help prices somewhat in the short term. When supply/demand is as tight as it is today, 70,000 bpd of high quality light crude demand reduction can make a big difference, possibly $10 - 15/bbl as the cited consultant suggests. Eliminating the ethanol requirement would also cut costs.

Jake in Salt Lake:

To Frank the Sales Forcaster:

Obviously supply and demand, the cardinal rule of economics, is at play with regards to the price of oil. But oil, the raw material used by refineries to make gas, was around $27 a barrel when Bush took office a little over 7 years ago. A barrel of oil is now $120. While demand, both domestic and international, has certainly increased over the past 7 years, the International Energy Agency reports that world oil production has only increased by an average of 1.7% per year. In other words, supply and demand do not explain the high cost of gas. A weak dollar, on the other hand, does explain this. The Federal Reserve's inflationary tendancies have weakened the currency and a dollar isn't going as far as it used to.

The dollar's weakness is not recent, it has been on the decline for quite some time. What is recent, however, is the steepness of its decline.

I do however tend to agree with your assessment that small increases in demand will have a disproportionate impact on price. I also agree with Doug in Alaska on the need to drill in ANWAR. But even if regulation is lifted (and I think it should be), I'm not convinced oil companies will chose to invest in the infrastructure necessary to drill there.

I'm not sure what the final price impact will be of not filling the SPR, but I am glad that it is being done. One would think that the Iraq invasion, perhaps the biggest foreign policy blunder of all time, would have tamed our hawkish insticts to invade other countries. But if we don't learn our lesson from Iraq, hopefully depleting the SPR will prevent us from going to war against Iran in order to plunder their oil.

goody:

I AM NOT A REPUBLICAN OR A DEMOCRAT SO THIS IS NOT A POLITCALLY MOTIVATED RANT. THE REASON GAS PRICES ARE SO HIGH IN THE UNITED STATES RIGHT NOW IS BECAUSE FOR THE LAST 30 PLUS YEARS THE OIL COMPANIES HAVE NOT BEEN ABLE TO BUILD ANY NEW REFINERIES. THEY COULD NOT DO THIS BECAUSE OF THE ENVIRONMENTALLISTS. THEY MADE IT IMPOSIBLE TO BUILD NEW REFINERIES. I THINK THE GOVERNMENT SHOULD DO NOTHING TO CURTAIL THE INCREASE IN PRICE AND LET IT GET TO WHAT?? 10 DOLLARS A GALLON, 15 DOLLARS A GALLON. IF IT GETS THAT HIGH WE WILL HAVE PEOPLE STARVING IN THE STREETS AND OUR COUNTRY WILL STOP BECAUSE EVERYTHING WE EAT AND BUY COMES TO THE STORES BY TRUCKS THESE DAYS. HIGHER GAS PRICES DIRECTLY EFFECT FOOD PRICES AND EVERYTHING ELSE WE BUY IN A STORE. IF GAS GETS THAT HIGH WE MAY FINALLY SEE SOME ACTION BY PEOPLE AND SOME REAL THINGS CAN FINALLY GET DONE.

Michael:

Two words: long straw!
Keep an eye those salt caverns.

Scott L.:

For those younger readers who truly believe the fairly tale of "supply and demand" and "markets" as it applies to the world oil industry, rest assured you'll continue to hear these distractions the rest of your life.

What has brought us to today is pure political tricky by the U.S. as orchestrated by Republicans through Bush and Cheney energy "policies." Oil companies are literally robbing you everyday at the pump and they will never, ever be held accountable.

Cheney's energy policy, you ask? Hush hush, there will be no discussion of this, or even who attended let alone what "game plan" was developed.

Well America, you're living the "game plan." Make your calendar for Jan or Feb 09 and just watch prices tumble after Democrats take back the government out of the hands of those who intend to rob you blind while telling you they love you. The oil companies know the jig is up - they are currently squeezing every last penny out while they still can.

So young ones, mark your calendars and watch. And for the future, buy stock in oil companies and other utilities when Republicans get into power. Do you really believe record oil company profits under a Republican led White House is coincidence?
Think for yourself and question authority.

Anabasis:

What a crock,the oil reserve will do nothing to oil prices,but if we need it, it could mean a great deal later.It is for emergencies.Does this mean we have 97 posturing fools in the Senate?Is that last statement the reason we don't have an energy policy because we have posturing instead of policy?Decades after the initial embargo we are helpless because of our non-partisan stupidity?We are arguing over food versus oil,is there anything now we can do?Of course not,we must wait decades more for unknown "for sure" relief to come.The same people and parties that led us to this state are suggesting solutions and this is the best they offer? Alas Babylon.

Frank the sales forecaster:

Supply and Demand, supply and demand, supply and demand. For some number of years now we have been told that increasing demand, both domestic and international, has lead the price of oil up (don't bring up the dollar the price of oil was up before the dollar went down.) For at least the last 24 months increased purchases for the SPR have been the majority in the increase in domestic demand. At the margin of a production function (near the limit of production for example) small increases in demand have disproportionate impacts on price. Comparing the incremental change to the whole always minimizes the appearance of the incremental change. The straw that breaks the camel's back is very small compared to the total of the straw on the camel. All US demand for oil is now in negative growth. All increases in the price of oil now are the result of Chinese manipulation of their currency exchange rate vis the US dollar. Go, Bush Go. In fact sooner than 1/20/09 would be appreciated.

Curtis:

Make it simple, take it off the commodities market, quit letting speculators jack up the prices everytime Bush mentions the boogeymen under his bed are looking at an oil pipeline to blow up. Nationalize it, keep the price fixed and lets get back to the business of rebuilding an economy G.W. Bush destroyed with his delusional paranoid fantasies.

Doug in Alaska:

Jake in Salt Lake is right. If you look at the price of gas in Europe using U.S. dollars as a measuring stick, the price has skyrocketed. However, look at the price of gas in Euros and you will discover that gas is only a little more expensive. Wall Street was greedy and made bad investments by giving "mortgages" to anyone with a pulse, now they need to be held accountable for their actions. No Wall Street Welfare programs.

ANWR- Open it. The Canadians are sucking it dry from their side of the border anyway. Why pay them for our gas? Canada is a major supplier to the U.S. (Why is the Canadian dollar almost equal in value to the U.S. dollar? Jake knows;-) Environmental impact to region? I've visited the North Slope, talked to workers and engineers. 1. place a postage stamp on a football field. The postage stamp represents the oil development footprint in ANWR. 2. Oils spills and pollution. The oil companies are required to maintain a zero tolerance to oil spills on the North Slope. This includes leaking fluids from vehicles. The fluids dripping from your car as it sits parked is more than the amount allowed in the Alaska oil fields or would be allowed in ANWR.

RNCarol:

Why are some of you turning this into a political shouting match? I want my kids and their kids to have "viable resources", too, but if we end up homeless and speaking Chinese because the LIBERALS want to save the environment, what good is any oil or other form of energy going to do them?

The Kev:

A drop in the bucket. The price of oil will climb until it is replaced or demand drops.
Yeah Right!
Everyone is still looking at the symptoms and not the disease. Wanna know why oil goes up? Duh, cause we want it, will not do without it, cannot enjoy our lives if it is withheld. Sound like anything you've heard before? It's called addiction. The addict builds a tolerance to his/her stimulant of choice until it eventually kills them or they smart'en up.
Think about this: a subsistence farmer couldn't care less about the price of oil. As long as he gets sun and rain at the right time he's happy. Wanna solve the oil problem? Either change EVERYTHING about your thinking or just wait...wait long enough and the problem will solve itself, maybe not the way you would like tho!

Slick:

"How about drilling in ANWAR, clearing red tape for new refineries, new nuclear and coal power plants, standardizing the gasoline blend across the US, coal-to-gasoline technology, plug-in hybrid battery technology, and power grid improvements to support the increased load that's going to come from plug-ins?"

"Oh wait...that would mean making some tough choices in an election year...instead, why don't we just cut purchases for the strategic reserve and hit the Pour Housebar for martinis and cosmos?"

PapaBear:

@KD: RE: "It seems as if Bush wants to make sure the rich oil tycoons are richer before he leaves office- could he have investments in these."

Where do you think the Bush family makes its money? Heck, his dad even works for the Saudis as an oil consultant. No, I don't see much chance of oil prices decreasing even a few cents while Bush and Co. control our country. Except for right before the elections. I'll bet you a tank of gas that McCain proposes some "sweeping reform" that suddenly makes gas prices drop during September and October. Imagine how many people would vote for him if he could do that. Of course prices would start climbing right back up in mid-November after he gets elected. :-S


Luis B:

The burden is on our government to assist us, on the companies to create new technologies available, AND on us, the consumers, to STOP BUYING gas-guzzling vehicles!

Our society was greatly influenced by the early automobile companies like Ford! "Hop on your car and take a trip" has been our motto since Henry Ford's Model T.... we're now addicted to this. What we need is, hop on your moped and ride to work! Us, as consumers, need to take the step here, as much as, and possibly even more, then the government needs to act!

I'm for Obama in this campaign, but regardless if McCain (or Clinton) win, WE NEED TO GET OFF this addiction! I agree with HYPNOS where this is basically a National Security Issue and need to be able to stand on our OWN TWO FEET as a nation!! Government needs to distance themselves from the powerful Oil moguls! They are just TOO DAMN powerful!!! Obama has been getting MOST (90%) of his campaign funds from us, citizens, so he's not tied down like Bush was! Bush JUST OWED TOO MANY PEOPLE FAVORS.

Let's get the heck out of this dependency!

Matt Stevens:

I have three words for you all: limits to growth. Donella Meadows called it out in the 1970s. Call it peak oil... call it peak everything... call it a weak dollar... call it manipulation by the oil companies... call it what ever you want, but the truth is there are limits to growth on this planet.

This may be somewhat simplistic, but our economy needs approximately things to function: 1) a manufacturing base (oops that’s mostly gone); 2) liquidity (oops, that’s mostly gone too); and 3) cheap energy. That's going too.

If our current administration and it's elected lackeys had invested 600 billion into alternative energy, biotech and nanotech, we’d be quite a ways down the path towards economic and environmental sustainability.

Unfortunately, they have not and we’re more than likely toast as a result.

Ralph:

Before we start drilling in the Artic preserve, off-shore of the U.S., and converting coal to gasoline, we should realize a simple set of facts. THE OIL BEING PRODUCED IN THE U.S. AND THE FUTURE DOMESTIC PRODUCTON DOES NOT AND WILL NOT BELONG TO THE U.S.! The oil companies own the oil and it does not seem logical that if the worldwide market for crude oil is, say, $200/bbl, these companies would, out of the kindness of their hearts, sell it for U.S. use at anything less than the world price! We had law to confine the sale to domestic use, but that is no longer in effect. We are now exporting a small part of Alaska crude to the Far East. Also, we export many million tons/yr of our coal, due to the high world prices. This problem should be solved before we count on domestic production to solve our energy problems!

Slick:

This is about $0.03 of oil for every car in the US each day. Will it make a difference? Perhaps only in the election in November

Eric P.:

We need to keep in mind what these oil reserves are for... to assist in keeping the US army, navy and air force supplied with fuel to defend our country in the case of a war if and when oil became that scarce. Also, if oil starts to dry up, it is a way to float the US energy demand until we are converted to alternative energy sources.

Hypnos:

How many times do I have to say it? Reducing U.S. exposure to fossil fuels is a matter of national security. Is anybody hearing that from any political candidate, republican or democrat? No... You're not. Well folks it is a matter of national security and that is the real lesson of 911. We need to get off this addiction, create a whole new economic reality, leave the Arabs and Persians in he sand with their oil and their hatred of each other and we can lead the world in doing it. We went to the moon in a decade and we could do this, if we had the leadership. ITS NATIONAL SECURITY PEOPLE!!!!!!!!!!!!!! You might think and therefore you might BE.

Bob Armstrong:

At least it's $700,000 less per day , $2B per year of additional debt for no useful purpose .

Jeff:

I hope by now everyone would agree that the U.S is to dependent on the oil wether foreign or domestic we as a society did this to ourselves. we can fix it, but it will take a culture change for the U.S. people.

Tried:

Gasoline prices today hit an all time average high of $32 a gallon in the United States.

Two months ago, OPEC Nations voted to bar the United States from receiving any oil shipments. As you may remember, the government's SPR was drained last year by act of congress. It was thought that this act would bring down gas prices; however, the oil companies reacted by exporting more oil.

Also looking back to what led up to this crisis, Congress last year stopped incentives for ethanol production leading to the closure of most ethanol plants. Food prices jumped at least 1000% as the world reacts to the great economic depression. A loaf of bread in a Portland, Oregon store sold yesterday for $65; however, the customer didn’t live long enough to enjoy eating it. 31 year old Betsy Ross was shot in the head by a hungry little boy as she exited the store.

Today, unemployment nationwide is at an average of 95%. Most all banks and other savings institutions have closed. Only the Federal Reserve banks remain open under tight security.

Civil war has broken out in many parts of the country, with the morgues overloaded; bodies are allowed to stack up on the streets.

China is demanding land for payment of debt and has moved its military into Alaska in its take over move. China says that it will help the world by drilling for oil in the Arctic National Wildlife Refuge (ANWR). Alaskans now under China’s rule will be working the new oil fields.

Hilary Clinton is in talks with China hoping to be a high ranking politician in Alaska’s new communist government. “It would have been better for the little people had they voted for me,” she said, “but I never give up!”

shojin:

I have three words for you all: limits to growth. Donella Meadows called it out in the 1970s... call it peak oil; call it peak everything... call it a weak dollar... call it manipulation by the oil companies... call it what ever you want, but the truth is there are limits to growth on this planet.

This may be somewhat simplistic, but our economy needs approximately things to function: 1) a manufacturing base (oops that’s mostly gone); 2) liquidity (oops, that’s mostly gone too); and 3) cheap energy. That's going too.

If our current administration and it's elected lackeys had invested 600 billion into alternative energy, biotech and nanotech, we’d be quite a ways down the path towards economic and environmental sustainability.

Unfortunately, they have not and we’re more than likely toast as a result.


lazy ignorant:

Get out of the SUV fatso!!

Bob M.:

Stop Filling U.S. Oil Reserves?

Why not? We've got oil in the ground all over the U.S., but the Democrats/environmentalists (notice 'mental' in that word) won't let us touch it.

JimmyL:

The car industry still plays games. Take for instance the "NEW Chevy Volt" it gets about 40 to 60 miles between charges. Well the EV1 back in 1997-99 with todays batteries would have gotten over 160 miles per charge. (www.ev1.org) General Motors is pulling another fast one on the public. Oh yea not to forget Honda is to begin LEASING hydrogen cars (Honda FCX) right now in LA. Guess we need pressure on Congress for an infrastructure of hydrogen pumps. That is what our leaders should have in their sites.

JimmyL:

The car industry still plays games. Take for instance the "NEW Chevy Volt" it gets about 40 to 60 miles between charges. Well the EV1 back in 1997-99 with todays batteries would have gotten over 160 miles per charge. (www.ev1.org) General Motors is pulling another fast one on the public. Oh yea not to forget Honda is to begin LEASING hydrogen cars (Honda FCX) right now in LA. Guess we need pressure on an infrastructure of hydrogen pumps too. That is what our leaders should have in their sites.

Concerned Sailor:

52 days of burn before we're done.? You can't get the Air Force and Army mobilized in less than 90 days. True, emergency action and indigenous production can extend that time, but what politician has the back bone for that?
More than anything else, when the oil market hears that the reserves are down from the week before, the price goes up. Not buying any oil, will make the price really surge.

MJTIMBER:

We can look for petroleum all we want, but the problem isn't in the looking, and certainly isn't in the lame brained notion that refineries are limiting production. Shell has taken refineries off line in the US at a time when prices are at their historical highs. Why would they do this if there was such demand and the margins would be so favorable? Even worse are those who blame spectulators. The only way spectulators can make money is because they're stockpiling petroleum to keep it off the market, which is not occurring.

Here's the real problem: we're running out. It's called supply and demand. All the easy fields have been tapped. Sure, there might be some decent reserves in the arctic, in Alaska, heavy crude (tar sands in Canada and Venezuela), and scattered around the globe. But even if developed, prices will remain high, as most of these weren't developed since they cost more than $25 a barrel just to produce the crude. Forget speculators, environmentalists, and refineries. Peak oil is here and probably gone, and stupid stunts like this in congress won't amount to a hill of beans.

JimmyL:

The entire problem is Oil. Eliminate the use and thus the cause.

MM:

This sort of thinking typifies the mess we’re in now. Spend what you have and what you don’t have. Worry about it later.

Will someone please explain to me how this is going to help? Are the politicians so blind and dumb not to realize what the rest of us already now? Speculators are the cause for the dramatic rise in fuel and food prices and the ridiculous policies being enacted are just a temporary placebo to a really serious problem. They can blame China for the mess all they want to, but American politicians tend to be a vapid bunch, worrying about their political donors, their constituencies or their necks.

When will they look beyond today and plan for tomorrow for the good of ALL?

Dan:

What about electric cars? Say a golf cart or something like that? Is that possible?

Jake in Salt Lake:

Not one poster here has addressed the fundamental reason why gas is so expensive: a weak dollar.

Europeans have not been hit as hard by the aggregate oil demand shock since their currency has held its value better than the greenback.

Of course, the Federal Reserve is to blame for pushing down the dollar's value by lowering interest rates, injecting massive liquidity by flooding the market with dollars (i.e. Term Auction Facility & Term Securities Lending Facility). This causes foreign investors to flee dollar denominated asset classes (i.e. stocks, bonds, mutual funds) and go into something they judge to be more stable (i.e. foreign stock market indexes and commodities, such as oil, wheat, soybeans, corn, etc.).

The Fed is pursuing this policy because they are trying to keep major investment banks afloat (Bear Sterns, Goldman Sachs, Lehman Brothers, JP Morgan et al) due to these investment banks holding risky Structured Investment Vehicles (SIVs) or Mortgage Backed Securites (MBAs) whose valuations are over priced. The creditors to these investment banks are worried and are demanding payment and these banks are facing a liquidity crunch because they don't want to liquidate assets at fire-sale prices in a depressed market.

Essentially, what the Fed is doing to prop up Wall Street investment banks is hurting all American consumers by weakening the dollar.

Even the price of oil, which has been subject to massive government price distortion, has remained steady when denominated in gold.

These charts show that when oil is priced in gold, prices remain shockingly stable.

http://www.downsizedc.org/blog/2008/may/13/fighting_the_inflation_tax_with_gold

John:

The real issue is very complex. Until we move away from dependance on foreign nations, we will be held hostage to them. We've become a nation of imports, a throwaway society, full of greed with a mindset of self before others, all in the name of having a better life than our ancestors, or maybe even our friends. We as a society are not very content. Let free market rein, let fuel hit $5, $10, $50 a gallon and see if people will still commute in their V8 tucks and SUVs. People need a wake up call to become more concerned with the future of our great nation. We need to have a working mass transit systems. We need a lot of things to happen to get us away from our dependance on foreign oil. I think that has to start with a wake up call. Then we might get more than a handfull of people doing something about it. Or, you can step up and start doing something now.

Matt:

We won't drill for more oil. We won't build new refineries. We won't build nuclear power plants. We won't accept high oil prices. We'll bash big oil companies. We'll demand that renewable energy infrastructure is built. We won't accept windfarms off our pristine coasts. We won't change our lifestyles, but we will demand that others do.

Have I got that about right, you liberal morons?

Tmoney:

@TIM

"I've heard that this oil isn't used in the US, but sold overseas."

Nope Myth. Please go here for a full explanation.
http://www.snopes.com/politics/gasoline/alaskaoil.asp

Anyways it wouldn't matter. Oil is a commodity in great demand and short supply across the world. If we shipped all our oil to Japan, it wouldn't change much in prices, as Japan just wouldn't buy as much oil from Saudi Arabia, who would then send that extra oil to us forming the circle of world trade that exists now.

And drilling a bit more oil in a remote area of alaska just isn't going to drop prices for the consumer. Make Oil companies rich yes, save everyone at the pump money, no.

China and India are building full industrial societies on the scale never seen before. Billions of people are starting to get the means to afford the lifestyle Americans are used to. Oil is being sucked up by these countries as fast as it can be pumped to fuel this. Gas will only get more expensive from now on. The days of 99 cent or $2 gallon gas are long gone.

RobbyMc:

Yep, if they voted to build a new refinery, that might make a difference. This is a sickening waste of our government's time. Conservation would be a good thing but political bluster...what a waste! Go Twins!!

Arthur Lemay:

To RKB:

Are you mad? Millions of people will starve to death. The economy will enter a major recession, companies will die, people will be unemployed. You sound just like the Environmentalists who say there are just too many people anyway -- let them starve. The Eco-thugs have suppressed oil exploration, and refineries with their fairy tale of renewable energy and they are filing lawsuits to stop virtually all energy projects.

The renewables take hundreds of square miles for their installation for EACH traditional power plant which is not built.

Are you an Eco-thug too?

Tim:

Wasn't the oil pipeline in Alaska supposed to help with the oil shortage back in the 70's? I've heard that this oil isn't used in the US, but sold overseas. If this is true, why not use the Alaskan oil here in the US?

Keith:

"I have a bad feeling about this..." Oh well, why not continue to pay for both sides of the War in Iraq, we can just put it on our credit cards.

Bill:

That 52 day supply is suppose to be what it takes to turn on the oil pumps in Alaska and get the oil flowing through that expensive pipeline that we had installed.

This may be a shot in the dark, but I might suggest that we look at turning it on and deploying some of that oil this way.

The real solution is Hybrid, to reduce our need, then an alternative fuel source to eliminate our need for oil. We have the technology, now as a people we must show that this is what we want. That Alaskan oil would buy us the one or two years we need to get the Hybrids on the roads, enmass.

TrafficBulldog:

This is a very short sighted move.

We will need that strategic petroleum in the future...at any price.

ZAc:

Drilling in Alaska??? Do you really want to prove your GREED by taking something NOW that your children may need in the future? Or DO YOU as most REPUBLICANS believe in survival of the fittest (not to be confused w/evolution of course) and NOW being the fittest??? Self-serving IDIOTS unwilling to sacrifice anything other than the neighbors kids to maintain your wasteful lifestyle....

Harold:

It.s the working man that is suffering.Did you ever think about the person who has to drive 50 to 70 miles to work every day? It's the stock market speculators that is driving the price up.Stop them and the price will go down.

KD:

It is a start- if everyone globaly was to conseve a "drop in the hat" the would add up to alot.
It seems as if Bush wants to make sure the rich oil tycoons are richer before he leaves office- could he have investments in these.

Wally:

At times like these, we should be adding more oil to the SPR, and quickly. The scariest figure in the article is that SPR contains only 52 days worth of imports! Real energy security will be gained when Americans are motivated to not drive single, to drive more efficient cars, to use air conditioners only in hospitals and senior centers, to dry clothes on lines not in electric dryers, ... in other words, to sacrifice. Let's reduce demand for fossil fuels by 33%, not go beg the Saudis to turn on the tap.

BC:

Just another way for congressman to say they did something, even if it makes no difference. It’s not about lowering our gas prices, it is about their re-election. Stop voting incumbent!

DepotDog:

Idiots in Congress. When they restart filling the reserves, the price will be $180 per barrel as the demand will continue to grow and the supply will continue to shrink. Meanwhile, we are putting the US security in jeopardy because it is supposed to be a "STRATEGIC RESERVE" in case of war or major international crisis. Idiots.

Cliff:

Lack of refinery capacity in this country is a big factor in the run up of costs in the US. How about combining a halt of purchases for the stratigic oil reserve with a hefty excise tax on the oil companies doing business in this country to build a huge government owned and operated refinery complex. It is clear that with all these easy profits the oil industry is not about to expand refinery capacity. It is not in their economic self interest.

RKB:

Sounds like a typical Republican response. Hurry and change the price of oil so our constituents can continue to drive Hummers. What we really need to do is to encourage people to change their stupid behaviors. One *great* way to make gas take a smaller bite out of your monthly budget is to sell the Hummer and buy something smaller and more efficient.

Personally, I hope the price of oil doubles again. The people paying the most will be the people consuming the most. Goods transportation will be more costly and that, too, will be passed onto the consumer. Again, the people paying the most will be the people consuming the most.

That is as it should be.

Jeff Newton:

What we need now is more refineries to process oil into gasoline and drilling in Alaska and offshore. Simply buying oil or drilling for it does no good if you have no capacity to process it. Also, we need to follow Europes example of putting a nuclear reactor on every street corner. If the environmentalists scream, then let's have a national referendum on the points and see what gets voted up or down. I have a feeling that the enviros might be silenced....

Alan:

"...is too tiny to make any difference...", "...account for 0.3 percent of demand for that grade of petroleum,...", "...it could add...", "amounts to less than 0.1 percent of world oil demand..."

In otherwords, the amount is so small, nobody really knows what impact, if any, the halt in buying for the SPR would do. I also don't see how the SPR purchases, amounting to 0.3% of the demand could add 10% to the price.

The politicians are just looking to be seen doing something, even it it has no affect what so ever.

PostGlobal is an interactive conversation on global issues moderated by Newsweek International Editor Fareed Zakaria and David Ignatius of The Washington Post. It is produced jointly by Newsweek and washingtonpost.com, as is On Faith, a conversation on religion. Please send us your comments, questions and suggestions.