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IEA Joins Fed In Making Failure Into Policy: Says Additional SPR Releases Possible

Tyler Durden's picture




 

If there is one thing in the past year that has received more ridicule than the Fed's horrendous monetary policy it is the IEA unprecedented decision to release 60 million in crude from the global strategic petroleum reserve. One needs to take a simple look at the price of crude just today to see what really is driving the prices in the energy complex. But that does not prevent the IEA from pursuing an obstinate insistence that its decision was justified, and defending the fact that it was nothing more than a puppet in the administration's political plot. From Dow Jones: "The International Energy Agency Wednesday rebutted criticism of its decision to release 60 million barrels of emergency oil stocks, saying the move is having the intended effect.  The IEA, which represents major energy consuming countries, hit back at some analysts' "blinkered focus" on the price of oil, which has rebounded above its level prior to the stock release. More important is that the market is now more flexible and the price of light sweet crude, relative to heavier grades, has fallen after increasing sharply following the outbreak of the Libyan civil war, it said." Although the confirmation that not only the Fed redefines Einstein's definition of insanity is this: "The agency also suggested an additional supply release was possible." Great: we are confident JPM just can't wait to lock in another 10% risk free arb by buying up Light Sweet at $107 at the next SPR auction and selling it, with a 3-6 month delay of course, in the open market at $120+.

"We are still seeing a sharp rise in the call [for OPEC crude oil] for the third quarter," said David Fyfe, head of the agency's Oil Industry and Markets Division on a conference call with reporters. "We will assess the situation very carefully in the early part of next week, which will help us to reach a decision."

Until Wednesday, IEA officials have largely downplayed talk of a second emergency release. But Fyfe's comments suggested the IEA is considering that option somewhat more seriously.

The tone of the IEA report contrasted with that of the OPEC monthly report released Tuesday, which emphasized how economic weakness could depress oil demand in the coming period. The IEA Wednesday raised its 2011 oil demand forecast one day after OPEC trimmed its estimate for 2011 demand.

The IEA warned that, despite an increase in production from members of the Organization of Petroleum Exporting Countries in June of 0.8 million barrels a day, the need for additional oil supplies this quarter from the group has barely diminished, due to increases in demand and lower-than-expected production elsewhere.

The IEA's June emergency release has been criticized by many in OPEC as an example of meddling in markets. Some in OPEC have also questioned why the IEA took the action given promises by Saudi Arabia and other OPEC producers to ramp up after talks broke down at the last OPEC meeting in June.

Ah, nothing like adding outright lies to IEA's repertoire of terminal incompetence. Here is the truth about the "surging" demand for Saudi excess capacity oil (which by the way does not exist):

Top oil exporter Saudi Arabia has offered extra crude to its customers for August but refiners, particularly from Asia, have largely declined, a person familiar with the matter said Monday.

"The response received from buyers wasn't very encouraging, so it is early to say if Saudi will up its production more this month," the person told Dow Jones Newswires.

Saudi Arabia in June produced an extra 467,000 barrels a day to lift its crude oil production to almost 9.5 million barrels a day, according to a Dow Jones survey. The kingdom pledged to boost output to as high as 10 million barrels a day in response to mounting demand in the second half of the year. It is unclear where these plans stand after the International Energy Agency decided to draw 60 million barrels of oil from its inventories on June 23.

So while one may or may not wonder what the truth behind the IEA's lies is, one thing is certain: the next time Obama's popularity rating plummets to a new all time low, which should be any second, the IEA can be sure to come to the rescue. Which, as noted above, should add at least another 7 figure number to Jamie Dimon's paycheck, even as it removes another 0.5% from global GDP in the long run.

 

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Wed, 07/13/2011 - 14:56 | 1453025 the not so migh...
the not so mighty maximiza's picture

sell assets and print money, all the signs of a strong economy. 

Wed, 07/13/2011 - 17:28 | 1453702 chdwlch1
chdwlch1's picture

How about this for a reason.  JPM is "The Feds Bank" and is the largest holder of short contracts in the PM markets.  They are also the main beneficiary of the last SPR emergency, making a bundle at the auction after the release.  The last release was on the 22nd of June with Gold/Silver options contracts expiring on the 27th of June.  Could it be that JPM is getting killed on its PM shorts and is less willing to load up on more short contracts unless a deal is reached?  Could it be as simple as a cash flow issue due to the delay in raising the debt ceiling (and receiving $2.5 trillion to continue the charade)?  If they release more oil and then sell it a week later to JPM we'll have a better idea.  Next PM contracts expire on July 26th...look for the SPR release on the 20th or 21st to give this scenario some support.  BTW, debt ceiling deal deadline is the 23rd (I believe...10 days before August 2nd interest is due.)  This SPR release would get them through one more month, or until their eventual $2.5 trillion payday.

Wed, 07/13/2011 - 14:58 | 1453030 Confused
Confused's picture

Really? I guess the question is, are any of you surprised?

Wed, 07/13/2011 - 14:59 | 1453033 Hondo
Hondo's picture

This is all zero sum also...after the SPR is depleted ( I quite confident that they will say it's never depleted)  and the corporate SH have been given more of the wealth of the citizens we'll end up right back to where we were going anyway...expect be much poorer for the journey.

Wed, 07/13/2011 - 14:59 | 1453035 Franken_Stein
Franken_Stein's picture

 

It's not an error, it's a feature.

It's not stupidity, it's a plan.

 

Wed, 07/13/2011 - 15:21 | 1453134 fallout11
fallout11's picture

Perhaps if they tell lies long enough, they start to believe them themselves?

Wed, 07/13/2011 - 15:42 | 1453224 macholatte
macholatte's picture

IEA Joins Fed In Making Failure Into Policy

no, no, no..... it's not failure if the plan is to destroy the USA. What you're witnessing is success. What else could you expect from the Soros-Obama Progressive-Communist agenda? C'mon. Get real! Open your eyes.

Next up - the carbon tax.

Wed, 07/13/2011 - 15:02 | 1453045 CrashisOptimistic
CrashisOptimistic's picture

Saudi Arabia EXPORTS only 7 million bpd nowadays.  It was 9+ in 2005.

They are burning it all domestically (especially in summer, their electricity is from oil fueld power plants), and what they are burning is depleting and output of quality oil is falling.  They will publish upticks when Manifa comes online, but it's very heavy, very sour oil and no one can use it.

There is no answer to this.

Wed, 07/13/2011 - 15:22 | 1453142 fallout11
fallout11's picture

Peak cheap oil came and went, and we're on slipside now. Exportland model in full effect.

Wed, 07/13/2011 - 15:02 | 1453048 Global Hunter
Global Hunter's picture

I've heard how bad the economy would have been without TARP, stimulus spending, quantative easing. Its not hard to imagine the arguement will be, "imagine how much crude would cost if we didn't release 60mm barrels".  I suppose they keep releasing crude...then what?

Wed, 07/13/2011 - 15:27 | 1453168 Sgt.Sausage
Sgt.Sausage's picture

Then they run out.

Wed, 07/13/2011 - 15:28 | 1453169 hedgeless_horseman
hedgeless_horseman's picture

Then they we run out.

Wed, 07/13/2011 - 15:04 | 1453060 ivana
ivana's picture

Thanks TD

Wed, 07/13/2011 - 15:06 | 1453063 CrashisOptimistic
CrashisOptimistic's picture

Saudi Arabia EXPORTS only 7 million bpd nowadays.  It was 9+ in 2005.

They are burning it all domestically (especially in summer, their electricity is from oil fueld power plants), and what they are burning is depleting and output of quality oil is falling.  They will publish upticks when Manifa comes online, but it's very heavy, very sour oil and no one can use it.

There is no answer to this.

Wed, 07/13/2011 - 15:12 | 1453096 Sudden Debt
Sudden Debt's picture

their water distillation plants use as much oil as they produce clear water from seawater.

talk about waste...

 

Wed, 07/13/2011 - 15:07 | 1453071 digitlman
digitlman's picture

How many fucking iPads does SA export a day?    NONE.

Hence, QE3!

;-)

Wed, 07/13/2011 - 15:19 | 1453124 TheTmfreak
TheTmfreak's picture

We will have continued food riots if we don't. And by food I mean Ipads of course. Especially since they'll be a shortage of peas now since, yes in fact they will be consumed here locally in the good ol' US now that we've manned up.

Wed, 07/13/2011 - 15:08 | 1453073 alien-IQ
alien-IQ's picture

"Making Failure Into Policy" = A.K.A. Tradition.

Wed, 07/13/2011 - 15:08 | 1453075 Gringo Viejo
Gringo Viejo's picture

...and children shall lead them....

you could'nt make this shit up.

Wed, 07/13/2011 - 15:11 | 1453087 NotApplicable
NotApplicable's picture

Well, you could, but it wouldn't be worth the effort, as nobody would believe you.

Wed, 07/13/2011 - 15:09 | 1453078 NotApplicable
NotApplicable's picture

So, I guess it's time to get a fuel tank and create my own SPR on the dips.

Wed, 07/13/2011 - 15:11 | 1453083 CrashisOptimistic
CrashisOptimistic's picture

Gasoline doesn't store well.  It fractionates and loses quality over a month or three.  Sorry.

Wed, 07/13/2011 - 15:17 | 1453118 kito
kito's picture

what about diesel?

Wed, 07/13/2011 - 16:42 | 1453499 Citxmech
Citxmech's picture

Diesel stores for years.  Just make sure you keep an eye on condensation/water in your tank and microbial growth.

Right now I've got close to 100 gallons on hand at any time.  If I can swing it, I'd love to get a 250 gallon tank for precisely that purpose:  My own strategic reserve. 

Ahhh - so many preps - so little time!

Wed, 07/13/2011 - 15:20 | 1453127 francis_sawyer
francis_sawyer's picture

correct... but additives will prolong it a little

Wed, 07/13/2011 - 15:22 | 1453138 francis_sawyer
francis_sawyer's picture

better yet...

convert your engines to run off propane

 

Wed, 07/13/2011 - 15:26 | 1453163 fallout11
fallout11's picture

Modern computer-controlled EFI engines don't mind that, though. They compensate.

Recently put 2 year old (jerrycanned) 87 octane RUG through my old pickup truck to prove the point to a non-believing friend (he helped me haul it and dump it in the tank). Ran fine, as always....I do the same thing every year or two to rotate my storage.

Wed, 07/13/2011 - 15:41 | 1453220 Anglo in Abitibi
Anglo in Abitibi's picture

The stabilizer you can get at your gas station works well enough to store your snowmobile over summer with gas in the tank. I have no personal experience but people I consider quite handy consider Pri-G good for at least 1 year if not 2 provided it`s temperature stable storage.

http://www.priproducts.com/fuel_storage_consumer.cfm

Also seasonally speaking prices are lower in the winter because of reduced demand and butane content increase. So if you can time your purchase so that you`re buying low-butane summer gas during the shoulder seasons you`ll have the highest quality gasoline (and best fuel efficiency) hopefully below the average summer price point.

However apartment dwellers like me don`t have much in the way of gasoline storage space.

Wed, 07/13/2011 - 18:27 | 1453919 HungrySeagull
HungrySeagull's picture

I use Stab-il and have gotten over a years worth of storage time out of it for gasoline in the old Pre-Ban Jerricans. I suppose the Jerry cans are worth a fortune today what with the seals, lining and all.

Just remember to vent and let the cans breathe during high pressure cycles in the summer weather and exchange in winter during low pressure otherwise you will damage the metal and reduce capacity from 5 gallons to 4 or so.

I am seriously thinking of dropping in a cheap 250 gallon tank somewhere and whistle up a small bobtail tanker to come in from time to time.

Wed, 07/13/2011 - 15:10 | 1453081 slewie the pi-rat
slewie the pi-rat's picture

things arent' bad enuf already?  people's countries now hafta sell the oil back to the banksters and oil producers? 

relax.  it is but another way to transfer our wealth to the uber-rich.  maybe a little bit of helping them do some prepping in case TSHTF?  or for more miltary adventures?  

win-win!  + banksters!  + oil producers!

speaking of military adventures (and thus not going off-topic?) tomorrow is bastillle day!  and the full moon is friday!  i read this earlier:

Rights Group Accuses Libyan Rebels with Serious Abuse

see whatcha think?

 

Wed, 07/13/2011 - 15:14 | 1453106 CrashisOptimistic
CrashisOptimistic's picture

Oh, don't delude yourself.  If Gadaffi manages to survive and hang on (his odds improve each day), he won't be selling oil to those that backstabbed him all that readily.

He'll start out selling at Brent - $10 to Niger and Chad and Tunisia and Sudan.  That willbe maybe 200K bpd.  That 200K bpd will fund his country nicely and even start to replenish his personal coffers.  

When Italy knocks on the door, and France, and asks to purchase, he'll inform them that he will rise above petty revenge and vindictiveness and will indeed provide them the oil they need with only the most modest assessment for damage reparations.

The price will be Brent + $300.

Wed, 07/13/2011 - 15:25 | 1453158 slewie the pi-rat
slewie the pi-rat's picture

Oh, don't delude yourself.  If Gadaffi manages to survive and hang on (his odds improve each day), he won't be selling oil to those that backstabbed him all that readily.

i never said he would you be you moronic shitheaded asswipe troll.  the rest of this is not directed to you, shitforbrains.

the link i posted re:  serious human rights violation by the rebels includes a brief interview with this guy: 
HRW said that the rebel military commander in the Nafusa Mountains, Col. El-Moktar Firnana

i think this is the guy who defected from the moQ's forces.  then he went into the mountains and has some command and military discipline, to which many of the young men getting into this mess seem to respond.

Wed, 07/13/2011 - 15:38 | 1453215 CrashisOptimistic
CrashisOptimistic's picture

I wasn't attacking you, but since you're sensitive about such things, you might want to notice that this thread is about oil, not human rights.

Wed, 07/13/2011 - 16:21 | 1453349 slewie the pi-rat
slewie the pi-rat's picture

fuk you, asswipe.   Oh, don't delude yourself = I wasn't attacking you?  while pretending to respond to something i didn't say?  in reply to what i wrote?

wtf are you on, troll?   the war in libya, which this article is about, that war is about oil.  this is happening, today.  get some help, you moron.  you don't belong here.

 

Wed, 07/13/2011 - 16:24 | 1453412 slewie the pi-rat
slewie the pi-rat's picture

are you ann coulter?

Wed, 07/13/2011 - 15:11 | 1453084 Bastiat
Bastiat's picture

Well our credit and armed forces are fairly depleted why not pump out the reserve oil too?

Wed, 07/13/2011 - 15:14 | 1453102 Sudden Debt
Sudden Debt's picture

they're already doing so for 3 months now.

BP even got contracts to drill in national parks.

 

Wed, 07/13/2011 - 15:13 | 1453099 monopoly
monopoly's picture

It will make 0 difference after a few days. You guys getting the feeling that the next QE will not last very long in pumping up the market for the banksters, politicians and heggies. Look at this, and down we go.

Wed, 07/13/2011 - 15:30 | 1453178 fallout11
fallout11's picture

The addict is jonesing bad, but needs more monetary heroin each time for a shorter high.

Wed, 07/13/2011 - 15:15 | 1453112 P-K4
P-K4's picture

"IEA Joins Fed In Making Failure Into Policy." Classic headline ! People like this make Inspector Clouseau seem like Mensa material. Inspector Clouseau said, "Your architect should have his head examined !" (after Clouseau walks into the wall instead of the doorway).

Wed, 07/13/2011 - 15:16 | 1453115 XRAYD
XRAYD's picture

The smell of desperation in the morning!

Wed, 07/13/2011 - 15:18 | 1453120 sbenard
sbenard's picture

This only makes us more vulnerable to a real supply disruption or (heaven forbid) a war. Sometimes I think these elites genuinely want to destroy us!

Wed, 07/13/2011 - 15:18 | 1453121 francis_sawyer
francis_sawyer's picture

While you're on your daily errands, don't forget to top off the tank... As well as the one in the:

- lawnmower
- spare gas can
- tractor
- boat
- jr's go-kart
- weedeater
- snow blower
- & while you're at it, might as well just fill a rack of empty coke bottles & make yourself some molotov cocktails... Never know when they may come in handy

Wed, 07/13/2011 - 15:21 | 1453137 LFMayor
LFMayor's picture

+ on the molotovs.  Be sure to add some styrofoam packing peanuts to thicken them, cheaper and easier to find than real phosphate soap these days.

Wed, 07/13/2011 - 15:41 | 1453231 fallout11
fallout11's picture

I found Dawn dishwashing solution to be a decent enough substitute. Don't ask me how.

Wed, 07/13/2011 - 15:46 | 1453244 LFMayor
LFMayor's picture

LOL, I love this shit!   Those fucking milquetoasts think that the "guard" or some lardass mallcop security company is going to be there to protect them when this spills.

How many people are testing "designs" out there right now, i wonder?

Their first and greatest mistake was letting us get bored.

Wed, 07/13/2011 - 16:03 | 1453311 francis_sawyer
francis_sawyer's picture

lol... Paul Blart... Amerika's last line of defense... Instant classic!

 

 

Wed, 07/13/2011 - 18:29 | 1453931 HungrySeagull
HungrySeagull's picture

They eliminated the Phosphate in all cleaning products sold in walmart and such other stores without any notice to the public this year.

You can still get Phosphate in 5 gallon insitutional buckets on ebay.

Wed, 07/13/2011 - 15:29 | 1453177 FubarNation
FubarNation's picture

Ya but you have import the Mexican Coke bottles for them to be effective.  Ole!

Wed, 07/13/2011 - 15:41 | 1453232 LFMayor
LFMayor's picture

Get some Ball or mason jars off freecycle or craigslist man.  Seal up the gas inside, even a used seal cap will do,  tie a rag around the neck and soak it with motor oil, will take a lot longer to evap and not as hazardous to you when you're lighting.

 

Wed, 07/13/2011 - 16:05 | 1453321 francis_sawyer
francis_sawyer's picture

Better cool it guys... The way this thread is going, the Manhattan Project protocol will be online for view within a few minutes...

Wed, 07/13/2011 - 18:30 | 1453936 HungrySeagull
HungrySeagull's picture

Heh. It matters not anymore.

It would be nice to show some good old American CAN DO spirit and take your entire life off the Commercial grid entirely. People have lived for hundreds of years this way before we came along.

Wed, 07/13/2011 - 16:54 | 1453551 Citxmech
Citxmech's picture

That's funny!  I keep our Dodge diesel basically topped-off at all times and re-fill our diesel Suburban whenever we get down to 3/4 of a tank!  [still working on filling all the Jerry cans though]

Wed, 07/13/2011 - 18:31 | 1453942 HungrySeagull
HungrySeagull's picture

No less than half on my 18 wheeler back in the day. Filled each day.

 

There was one time I was 2 gallons left in the tank waiting on the fuel card to reset for the new month. That was a cold night.

Wed, 07/13/2011 - 15:20 | 1453126 caerus
caerus's picture

Big surprise...Hubbert was right...Saudi Royal Family scared of their own people...thus the $130 billion bribe...

 

 

http://persiangulffund.com/saudi-arabia-distributes-130-billion/

Wed, 07/13/2011 - 15:55 | 1453279 Marco
Marco's picture

Fear, and the fact that QE makes the long term value of their dollar reserves questionable.

Wed, 07/13/2011 - 15:28 | 1453143 FubarNation
FubarNation's picture

Will be interesting to see how the market reacts the next time.

Wed, 07/13/2011 - 15:26 | 1453159 Sgt.Sausage
Sgt.Sausage's picture

I hear light, sweet crude makes a good base for Pea Soup.

Eat yer damned peas, ferchrissake!

Wed, 07/13/2011 - 15:31 | 1453184 drivenZ
drivenZ's picture

whoohoo,let er rip. Liquidity for everybody. Cash, oil, whatever.  

 

"Fake it til you make it"...it works 60% of the time every time  

 

 

Wed, 07/13/2011 - 15:37 | 1453212 equity_momo
equity_momo's picture

I have been so early in calling for peak retard. But these guys are just begging to ring the bell.

Wed, 07/13/2011 - 15:42 | 1453234 r101958
r101958's picture

Notice how the IEA states that they may release more oil from the 'global' SPR right when WTI is getting close to $100 and Brent is approaching $120. Jeez, no connection there at all. This is like the Bernank intimating that there might be a need for more QE. The IEA intimates that they might authorize another SPR release....they may but it seems an awful lot like an attempt at oil price manipulation.

Wed, 07/13/2011 - 15:56 | 1453285 the grateful un...
the grateful unemployed's picture

Congressional Republicans are like dogs, if they don't see the cat, don't hear the cat, don't smell the cat, the cat ain't there. An international agency is telling the President to release his countries STRATEGIC reserve. That's treasonous activity, woof woof. But we have seen by now that the release of oil is meant to keep prices high, and the Saudi's would love to SELL MORE OIL INTO A FIXED BID, but who's buying when the game is really meant to fix prices, not supply? China should be, they have no SPR (yet) and probably aren't ready to take all this oil, and maybe they smell a sucker play at work here. And maybe there really is no more oil to buy than there was before the release, maybe its the thing as Ben and his friends buying Bens T bonds to keep interest rates low, and in this case asset prices firm. maybe that's why this dog don't hunt

 

Wed, 07/13/2011 - 16:06 | 1453327 john milton
john milton's picture

seems like markets needs fort knox sgr releases too

Wed, 07/13/2011 - 16:13 | 1453362 nah
nah's picture

see they cant stop printing oil and allow the world to become smaller... less glitz is ruff

Wed, 07/13/2011 - 16:31 | 1453379 Dr. Acula
Dr. Acula's picture

I recommend disgorging all of it.

The business of oil speculation should be left to businessmen. Financial decisions should not be based on bureaucrats', politicians', or voters' whims, but rather should be made by entrepeneurs who face financial losses if they plan incorrectly.

How can you justify forcing someone to pay the taxes that facilitate the storage of vast quantities of oil? Why can't these costs be privatized?

Wed, 07/13/2011 - 16:29 | 1453438 AldousHuxley
AldousHuxley's picture

SPR releases are part of QE now. 30% of import is crude, so to offset the inflation, use SPR.

 

Communism is dead but we still have centralized  planning.

Wed, 07/13/2011 - 16:31 | 1453442 PulauHantu29
PulauHantu29's picture

The release was a Handout to JPM ...none of it hit the streets.

I added tons (or should I say barrels?) of USO when oil dropped to 90.6....LMAO a great opportunity ...

Oil is Black Gold, My Friends..ain't never going down much in my lifetime....no matter how much they manipulate the market imho.

Wed, 07/13/2011 - 16:47 | 1453491 Dr. Acula
Dr. Acula's picture

>Oil is Black Gold, My Friends..ain't never going down much in my lifetime

Yep, the ratio of oil and gold prices is about the same now as it was 60 years ago.

But when fiat currency meets its fated demise, oil has zero chance of becoming money. You can carry a gold coin in your pocket, but you cannot fit 15 barrels of oil.

Wed, 07/13/2011 - 16:58 | 1453567 Citxmech
Citxmech's picture

Yeah - but if you can provide fuel when it's being rationed at the pump, or make/take delivery of food when other's vehicles are parked, that ability might be as good as gold.

Wed, 07/13/2011 - 17:17 | 1453657 Dr. Acula
Dr. Acula's picture

Sounds like price gouging to me. It's a crime to take a scarce resource to an area where it's urgently needed and then sell it there at a mutually agreed upon price. It's better if no one takes it there at all.

Wed, 07/13/2011 - 16:37 | 1453476 grid-b-gone
grid-b-gone's picture

Quick, eat the seed corn before some long-range thinker comes up with a plan to not eat it.

I should have been a TBTF oil trader. Backdoor bailout, baby!

Wed, 07/13/2011 - 16:38 | 1453481 adr
adr's picture

In the weekly report today it said oil and gas demand in the US fell once again. Less demand and still a higher price because the dollar got trashed, thanks Ben.

Wed, 07/13/2011 - 17:24 | 1453679 Dr. Acula
Dr. Acula's picture

That's why you need ABC investing - anything but cash.

Once the rich eject dollar-denominated bonds and cash from their hoards, the demonetization of the dollar will proceed apace.

Wed, 07/13/2011 - 17:46 | 1453781 CrashisOptimistic
CrashisOptimistic's picture

US demand is no longer the demand that matters.

It's demand in the Middle East and India and China.

Their consumption is exploding.

Wed, 07/13/2011 - 17:51 | 1453799 steve from virginia
steve from virginia's picture

 

More ass-hattery: anything but face reality and make changes.

Anything to keep the carz rolling and the suckers heading to the Chevy dealers for new pickup trucks.

There are a bit over 700 million barrels in the US strategic reserve plus another 45 million or so @ Cushing's WTI hub. Strategic flow rate is about 4 mbpd plus another half- million per day from Cushing.

Anything removed in the reserve must be replaced at a likely higher cost so the purpose of these releases is self- defeating. Moreso if there is a real emergency such as a Gulf hurricane or a political breakdown in Russia or KSA. We (US) needs an oil reserve as our food supply and distribution is 100% petroleum dependent - 100%.

No fuel, no food and even though some folks gas tanks are 'topped up', you cannot top the 'tank' behind your belly flab.

It would serve Americans right to burn through the reserve for no reason then have some sort of national emergency when fuel from the reserve is desperately needed. I will go down to the grocery store with a stopwatch and time how long it takes for the desperate to strip the shelves of everything -- probably less than a day.

Shortly after which period the 'recriminations' will begin ...

If we are smart we can start looking around for what we can jettison to some other market fool, to 'lighten our load': car, lawn mower, jet ski, second car, television, weed whacker ... 'oversized bank' ... 'business friendly' politician ...

...

It's all going to happen, it's happening now right under everyones' noses.

Wed, 07/13/2011 - 18:45 | 1453915 Dr. Acula
Dr. Acula's picture

>Anything removed in the reserve must be replaced

Why?

>at a likely higher cost

Maybe, maybe not. The market price of oil already accounts for the expected future demand of oil and of dollars. Saying "likely higher" is simply your entrepeneurial forecast, which differs from the consensus.

>We (US) needs an oil reserve

False. I don't need a food reserve. I can buy food at the local supermarket whenever I want to eat. Likewise, the US does not need a strategic oil reserve. Whether it's beneficial to have an oil reserve is something that can only be decided by an individual facing financial gains and losses for maintaining a reserve.

>as our food supply and distribution is 100% petroleum dependent - 100%. No fuel, no food

False. For example, I can grow my own food without the use of petroleum. Markets are infinitely better at solving problems than your platitudes suggest.

Thu, 07/14/2011 - 03:07 | 1455206 speedy
speedy's picture

Markets are infinitely better at solving problems than your platitudes suggest.

 What if the markets solve the problem by pricing food out of reach for 90% of the worlds population?

You may be able to grow your own food without fossil fuel inputs, but you can't feed 7 billion people without fossil fuel inputs.

Thu, 07/14/2011 - 07:32 | 1455377 Anglo in Abitibi
Anglo in Abitibi's picture

"False. For example, I can grow my own food without the use of petroleum. Markets are infinitely better at solving problems than your platitudes suggest."

How the F are you going to do that? Without oil and nat. gas there`s no chemical fertilizer, no organic fertilizer (unless you`re carrying it by hand), no pesticides, no more plastic containers, no irrigation equipment, no spare parts for the electrical system you`d use to pump your water with.

You only said that because you disrespect what oil and nat. gas does for you. Also even if you can come up with flippant responses on how you`d feed yourself if no-one else can you won`t have any food for long ...

Usually your comments are pretty good but man you sound like an ignorant ass above.

Thu, 07/14/2011 - 02:02 | 1455138 Placerville
Placerville's picture

According to Tradition, OIL is NOT Money!

Thu, 07/14/2011 - 06:29 | 1455291 Urban Redneck
Urban Redneck's picture

doubling down on STUPID - a WINNING strategy

Too bad the finite SPR doesn't lend itself well to a martingale... 

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