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As US Contemplates Releasing Crude From The Strategic Reserve, China Resumes Building Emergency Inventory

Tyler Durden's picture


A tale of two civilizations, one in ascent and one in decline, can probably be best summarized by how they ration for the future in that most important of commodities - energy, in this case vis-a-vis the respective treatment of the strategic oil reserves of China and the US. Because while all the rage in D.C. political gab in recent weeks has been whether the US will allow a release of oil from the SPR, just to appease those Obama voters who actually have a job and have to take a car to get to it, things over at America's nemesis in civilizational conflict are diametrically opposite. As Bloomberg reports, China has "started filling its emergency petroleum reserve at Lanzhou in the nation’s northwest, according to an official at the nation’s largest crude producer." Unlike the US, where everything is now a function of market liquidity, evil speculators, and political ambitions (rest in peace supply and demand), China is completely ignoring all the day to day mundane drivel, and is doing what is right - which is to make sure it is prepared for an "eventuality" in the crude supply. Said eventuality is 100% guaranteed to happen if the Panetta-McCain is given a green light to allow the liberation of Iranian crude to finally proceed following years of foreplay.

From Bloomberg:

China, the world’s second-largest crude consumer, finished filling the first phase of its emergency stockpile with 103.2 million barrels of oil in 2009. The second phase, comprising eight locations with a storage capacity of 168.6 million barrels, is scheduled to be completed by early 2013. The Lanzhou depot has a capacity of 18.9 million barrels.


The nation imports 10 million metric tons of crude a year, or 200,000 barrels a day, from Central Asia via a pipeline from Kazakhstan that started in 2006. The annual capacity of the cross-border oil line, China’s first, will rise to 20 million tons by 2013, according to CNPC.

As a reminder, here is how Chinese crude imports stood most recently as of January:

Yes. A record.


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Wed, 03/07/2012 - 11:49 | 2232213 VulpisVulpis
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All your crude are belong to us.

Wed, 03/07/2012 - 11:52 | 2232227 AN0NYM0US
AN0NYM0US's picture

Obama Strategic Election Reserve

Wed, 03/07/2012 - 12:01 | 2232273 Fukushima Sam
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Who needs an SPR when you can just go take it from Iran?

Wed, 03/07/2012 - 12:05 | 2232292 SheepDog-One
SheepDog-One's picture

Yes who needs reality, when we can just take over the entire world! Pretty much baked in they just have to pull it all off. Personally I think it all goes wrong. 

Wed, 03/07/2012 - 13:05 | 2232575 Augustus
Augustus's picture

Why take from Iran when it can be taken from Iraq or Afghanistan?

Oh, Wait.  That nonsense did not happen either.

FukiSam had too many chili beans and the brain fart exploded.

Wed, 03/07/2012 - 13:57 | 2232794 Arthor Bearing
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It will probably take 100 barrels of oil powering our war machines to capture each barrel of oil in Iran

Wed, 03/07/2012 - 15:06 | 2233052 falun bong
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yep a nice circle jerk, the US Military uses something like 20% of America's crude...while they are getting America's crude

Wed, 03/07/2012 - 12:01 | 2232259 Sudden Debt
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Wed, 03/07/2012 - 12:02 | 2232272 SHEEPFUKKER

How long till' the Chinese liberate Americans from themselves?

Wed, 03/07/2012 - 12:12 | 2232325 espirit
espirit's picture

I understand Walmart is also building emergency reserves of cheap Chinese iThings.

Laughing all the way to the bank, but it isn't me.

Thu, 03/08/2012 - 04:57 | 2235186 Tompooz
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   "How long till' the Chinese liberate Americans from themselves?"


That's a 50-year project.

Wed, 03/07/2012 - 12:10 | 2232320 SelfGov
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If that graph indicates anything it is that the US won't have the cheap oil resources necessary to build this fleet of electric cars that is supposed to "save" us.


Plant a garden.

Wed, 03/07/2012 - 13:59 | 2232800 Arthor Bearing
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People talk about the energy problem like it's a problem of production.

It's a problem of consumption. That's where we can make major breakthroughs, with existing technology. Plant a garden. Ride a bike. Turn off the air conditioner and sweat a little you fucking idiots.

Wed, 03/07/2012 - 12:03 | 2232278 Death and Gravity
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Observe an entire country hooked on a drug.

And it ain't heroin.

Wed, 03/07/2012 - 12:06 | 2232296 SheepDog-One
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I dont care about oil myself, I dont need it.

This will all really suck bad for the avg consumer-merican soon though.

Wed, 03/07/2012 - 12:24 | 2232383 Silver Dreamer
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I like oil but abhor the idea of murdering people to maintain an easy supply and low price of it.

Wed, 03/07/2012 - 14:03 | 2232816 Arthor Bearing
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It will not be an easy supply by any means. Any oil fields and pipelines not sabotaged by guerillas will come at a steep price of not just blood and money, but OIL used to power our war machines. It's a dead end attempt at a solution, but it makes rich and powerful people more rich and powerful so we all have to go along with it. Remember they hate us for our freedoms.

Wed, 03/07/2012 - 12:40 | 2232486 CrashisOptimistic
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So you're saying you are typing on a keyboard made of wood?

Wed, 03/07/2012 - 13:23 | 2232655 SheepDog-One
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Wed, 03/07/2012 - 23:24 | 2234615 StychoKiller
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My PC is made from wood:

(Well, most of it anyway:>))

Wed, 03/07/2012 - 13:07 | 2232580 Augustus
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The only real oil of value is Gash Oil.

Thu, 03/15/2012 - 11:55 | 2258051 fightthepower
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Bullshit, even if you don't drive, you buy things that are transported using oil, oil is used for all farming.  You eat don't you?

Wed, 03/07/2012 - 11:49 | 2232214 redpill
redpill's picture

The SPR is a political tool, not an economic one.


Wed, 03/07/2012 - 11:55 | 2232248 uno
uno's picture

they probably are trying to talk down the price, when Israel strikes Iran that is when they will have to release it, of course coordinated with Election

Wed, 03/07/2012 - 11:51 | 2232225 Zero Govt
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"..China Resumes Building Emergency Inventory"

Gotta get rid of those Dollars somehow so may as well swap the Fed toilet paper for something worthwhile

Wed, 03/07/2012 - 11:55 | 2232251 r00t61
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While I agree with that sentiment in theory, in practice, China needs to hold vast amounts of US dollars in order to maintain their currency peg.

But I suppose that doesn't preclude them from using some excess FRNs to get their hands on the black gold.

Wed, 03/07/2012 - 12:01 | 2232269 Dr. Engali
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China is preparing to cut that peg. When that happens shit will hit the fan.

Wed, 03/07/2012 - 17:46 | 2233671 JeffB
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"China is preparing to cut that peg. When that happens shit will hit the fan."


Not sure if that is their intent, but it would sure be an effective way to wage an economic war against us. It would cost them as well, of course, but what war doesn't?


Wed, 03/07/2012 - 17:57 | 2233723 Flakmeister
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Why would they cut the peg?

They would be shooting themselves in the foot, unless you are arguing that they want to devalue, are you implying that?

Thu, 03/08/2012 - 13:54 | 2236579 JeffB
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The peg is how they devalue their currency, in effect cutting the wages of their workers among other things.

That of course helps their exports, but eventually they're going to need to get away from building stuff for us for slave wages. Once they get their infrastructure in place, and have the know how, and the trained workforce, they can stop taking our ever devaluing pieces of paper and make stuff for themselves, or for countries and people who can give them more value for it.


Wed, 03/07/2012 - 12:04 | 2232286 WestVillageIdiot
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Price inflation is much worse when you have 1.2 billion mouths to feed.  China should know that they helped build this monstrous system and are now just as beholden to it, if not more, than any other participant. 

In the 1980s everything we bought had a "Made in Japan" label.

In the 2000s everything we bought had a "Made in China" label.

What happens to China if another name appears on all those labels?  Are they ready for that?

Wed, 03/07/2012 - 12:07 | 2232304 spartan117
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ZH had an article on that.  China is buying factories in eastern Europe to hedged against that happening.

Wed, 03/07/2012 - 12:25 | 2232395 WestVillageIdiot
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Is Bulgaria really the answer?  I'm being serious.  Of all the countries I would be looking at to invest in that might be pretty low.  I never hear a good story about Bulgaria, of all the former Eastern bloc countries. 

Wed, 03/07/2012 - 12:35 | 2232465 Silver Dreamer
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They make decent AK's.  LOL

Wed, 03/07/2012 - 13:18 | 2232628 Ace Ventura
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Thought that was the Romanians? Actually all those former Soviet colonies probably make decent variants.

Wed, 03/07/2012 - 13:48 | 2232749 Silver Dreamer
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I have a Bulgarian base rebuild from Lancaster Arms and love it.

Wed, 03/07/2012 - 15:10 | 2233076 falun bong
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Bulgaria is a proper thug-ocracy, run by former weightlifters from their Olympic team. Yah those same guys you see on YouTube blowing enormous farts as they clean and jerk 700 pounds

Thu, 03/08/2012 - 05:02 | 2235190 Tompooz
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Bulgaria runs a balanced budget and is ready to join the Euro zone. Bulgaria is actually a shining example to its neighbour, Greece.

Wed, 03/07/2012 - 11:52 | 2232228 GeneMarchbanks
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One is looking long term, the other living day to day...

Wed, 03/07/2012 - 12:11 | 2232324 aerojet
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I find it hard to believe that China is somehow the ant in this story.  If anything, it's the Chinese who are living paycheck to paycheck and kiting checks.

Wed, 03/07/2012 - 12:25 | 2232394 GeneMarchbanks
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That is asinine. The Orwellian terminology has you terribly disillusioned.

Wed, 03/07/2012 - 17:32 | 2233619 matrix2012
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Right! The printers belong to DC thus it must be better off! 

Wed, 03/07/2012 - 13:06 | 2232577 uno
uno's picture

"the other living day to day'

more like looting like there is no tomorrow (which there probably isn't)

Wed, 03/07/2012 - 11:52 | 2232231 Silver Dreamer
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The chess pieces continue to be moved in preparation for peak war.

Wed, 03/07/2012 - 11:55 | 2232249 SheepDog-One
SheepDog-One's picture

'Check....checkmate....check....checkmate' for 3 years now.

Wed, 03/07/2012 - 12:06 | 2232297 Incubus
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Can't wait for the draft.  I'd seriously go to war if some pig politicians got out of DC and went on the battlefield.  But they won't, so fuck em.  I'm not gonna fight someone else's war. My "war" is a socioeconomic one.  My "war" isn't a physical one where pigs sit around in their suits and find boogeymen to throw "excess" human "labor" at.





Wed, 03/07/2012 - 11:53 | 2232234 SheepDog-One
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LOL whats wrong....$106 oil putting a bit of a bind in the Maniacal Monetizers panties?

Wed, 03/07/2012 - 11:56 | 2232255 Sophist Economicus
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Skid marks

Wed, 03/07/2012 - 11:53 | 2232236 Moneyswirth
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Is it possible that China's is a more capitalistic, more market-oriented economy than of the United States? 

Wed, 03/07/2012 - 11:54 | 2232241 Moneyswirth
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"than of the United States" = "than that of the United States"

Wed, 03/07/2012 - 12:04 | 2232282 spartan117
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I've never seen someone get junked for making a correction to their own post.  Five times over, at that.

Wed, 03/07/2012 - 12:08 | 2232306 SheepDog-One
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Just messin with the guy. 

Wed, 03/07/2012 - 12:12 | 2232326 Hugo Chavez
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Just messin w u 2 sweetie

Wed, 03/07/2012 - 12:15 | 2232343 SheepDog-One
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Good! Its nothin compared to the kornholin we're all about to get!

Wed, 03/07/2012 - 12:19 | 2232358 Moneyswirth
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Wed, 03/07/2012 - 12:30 | 2232431 Dr. Engali
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Had to junk you for the junking.

Wed, 03/07/2012 - 12:36 | 2232471 Silver Dreamer
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I'll be your huckleberry.  I junked you for junking the junker!

Wed, 03/07/2012 - 12:09 | 2232313 Moneyswirth
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Serves me right for wanting correct grammar.  Bunch of backwater ingrates...

Wed, 03/07/2012 - 12:16 | 2232346 SheepDog-One
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Yea really...friggin hicks...btw for future reference you can edit comments if you want.

Wed, 03/07/2012 - 12:40 | 2232480 Silver Dreamer
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You meant to write, "It serves me right for wanting correct grammar," right?  If you're going to bitch about other people's bad grammar, you should use complete sentences.

Wed, 03/07/2012 - 13:24 | 2232658 SheepDog-One
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No, actually I didnt down vote anything, and just offering helpful future advice.

Wed, 03/07/2012 - 12:17 | 2232349 Matt
Matt's picture

No, just better at central planning since they are not subject to The Electoral Cycle.

Ha! you got junked for grammer-naziing your own post! Should have just used the Edit function ...

Wed, 03/07/2012 - 11:53 | 2232237 firstdivision
firstdivision's picture

SPR = Peter North, US Consumer = Chicks Face, Effects are equal in time and enjoyment.

Wed, 03/07/2012 - 11:56 | 2232253 VulpisVulpis
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So Obama aids in 'the release' ?

Wed, 03/07/2012 - 11:58 | 2232260 GeneMarchbanks
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I'm confused... you vist ZH to jerk-off?

Wed, 03/07/2012 - 12:07 | 2232298 firstdivision
firstdivision's picture

You say that like its not normal.

Wed, 03/07/2012 - 12:12 | 2232328 Taint Boil
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I cum in my pants every time MillionDollarBonus_ posts  ....  don't you?

Wed, 03/07/2012 - 11:54 | 2232240 forward ho
forward ho's picture

Energy wars. without the big E an economy will drop to subsistance level.

Wed, 03/07/2012 - 11:59 | 2232256 AC_Doctor
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Go green muther fuckers!  A Volt in every garage powered/charged by solar cells!


Wed, 03/07/2012 - 12:00 | 2232267 LawsofPhysics
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Might I also add...  "A Volt in every garage powered/charged by solar cells manufactured in China."

Wed, 03/07/2012 - 13:47 | 2232741 viahj
viahj's picture

did someone mention chinese solars?  where's Leo?

Wed, 03/07/2012 - 12:12 | 2232257 CrashisOptimistic
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FYI, there is some indication from JODI and EIA both (the two agree in a rare case on China) that mid 2011 was China's domestic oil production peak.  They hit 4.2 mbpd production in July of last year and November's data says 4.0 mbpd, with a steady decline in Aug, Sept, and Oct.

China may have hit their peak last year.  Imports will ramp up sharply if the peak holds, because mostly of those 26 million new total vehicles they project to buy each year.  Car sales were 14 million last year, another 1 million in heavy trucks and other vehicles.  They are projecting 26 million/yr in years to come.

If you tack on 700K bpd of consumption each year (from 26 million new cars each year), and produce say 150K bpd less each year domestically, presto that's 850K bpd of import increase and it's EVERY YEAR.  That's out of 3.3 million barrels/day of their present oil imports (the metric ton to barrel conversion is about 7, divide tons  by 7 for barrels).  That, my friends is friggin 26%/year increase in oil imports.

Where is that going to come from?  Who isn't going to get it who is getting it now?  

Look in the mirror if you're American and look at the face of economic decline.

Wed, 03/07/2012 - 12:26 | 2232409 Flakmeister
Flakmeister's picture

Yeah... I saw this analysis/discussion on Chinese production...

Way too early to draw any conclusions, but it may herald that they are plateauing.... 

But, your long term argument is bang on re: Chinese imports...

The economic/demographic factor is whether the rate of noveau riche consumption in Asia is greater than the demand destruction amongst the lower rungs here (and elsewhere)... At present, it is clear what the trend is, however, to project that too far forward may be a mistake..,

No matter how you slice it and dice it, the current trends of rising Asian demand, declining net Exports and plateaued production will not make for a happy time when they intersect in the future....

Wed, 03/07/2012 - 11:59 | 2232258 LawsofPhysics
LawsofPhysics's picture

China is also investing heavily in renewable and solar as well.  From the basic research right on down to the manufacturing technology.  No energy, no economy, it really is that simple.  but I digress, it takes a lot of energy to feed a billion people too, and with the average Chinese citizen spending more than half their income on food alone, I say good luck China.

Wed, 03/07/2012 - 12:29 | 2232423 Flakmeister
Flakmeister's picture

Yes, I agree, but based on history what country is better "psychologically equipped" to deal with the loss of ~10% of its population through famine and whatnot....

Wed, 03/07/2012 - 13:53 | 2232771 LawsofPhysics
LawsofPhysics's picture

Good question, I would also add, what country is more prone to aggression, better armed, and has fought a civil war recently?  How is your mandarin Flak?

Wed, 03/07/2012 - 14:10 | 2232840 Flakmeister
Flakmeister's picture

I'm afraid, not very good....

When it comes to catastrophically bad decisions, I don't worry about the Chinese.... I worry far more about the "good guys".... 

FWIW, the Chinese had a civil war more recently that the U.S.....

Wed, 03/07/2012 - 12:46 | 2232507 Silver Dreamer
Silver Dreamer's picture

We'll have spending half our income on food in common with the Chinese soon enough.

Wed, 03/07/2012 - 23:32 | 2234631 StychoKiller
StychoKiller's picture

Hmm, our Clowngress is full of "investments" too:

The Stimulus Plan The National Institutes of Health spending more than $400,000 in taxpayer money by paying researchers to cruise six bars in Buenos Aires to find out why gay men engage in risky sexual behavior while drunk -- and just what can be done about it.

The U.S. government is spending $2.6 million to make sure prostitutes in China consume less alcohol while working. As part of the five-year study that the National Institutes of Health bankrolled, researchers are visiting more than 100 houses of prostitution to monitor their employees, designated as FSWs, or female sex workers.

The National Institutes of Health (NIH) is funding a study on the use of ecstasy, LSD and other “party drugs” in Porto Alegre, Brazil. To do this, U.S. taxpayers will invest $117,876 for the three-year study, conducted by researchers from the University of Delaware, who will work in collaboration with researchers from Brazil's Federal University of Rio Grande do Sul.

Federal employees wasted at least $146 million over a one-year period in business- or first-class airline tickets bought in violation of travel policies, congressional investigators say.

It looks like Rep. Charles Rangel, D-N.Y., is going to get his wish – $2 million in taxpayer funding for a library commemorating his 37 years in the House of Representatives. The Charles B. Rangel Center for Public service will serve as a repository for his "papers," and the congressman will have his own office in the Harlem complex.

The earned income tax credit (EITC) provides $31 billion in refundable tax credits to 19 million low-income families. The IRS estimates that $8.5 billion to $9.9 billion of this amount—nearly one-third—is wasted in overpayments.

A recent audit revealed that between 1997 and 2003, the Defense Department purchased and then left unused approximately 270,000 commercial airline tickets at a total cost of $100 million.

Since World War II, the U.S. has spent $1.2 trillion on foreign aid to 70 countries – and all are worse off than they were in 1980, according to the U.N.

For the Department of Commerce for giving the City and County of Honolulu $28,600 in 1981 to study how they could spend another $250,000 for a good surfing beach.

For the Health Care Financing Administration for Medicaid payments to psychiatrists for unscheduled, coincidental meetings with patients who were attending basketball games, sitting on stoops, etc. -- the cost of which was between $40 and $80 million from 1981 to 1984.

The National Endowment for the Humanities for a $25,000 grant in 1977 to study why people cheat, lie and act rudely on local Virginia tennis courts.

The Office of Education for spending $219,592 in 1978 to develop a curriculum to teach college students how to watch television.

The Environmental Protection Agency for spending an extra $1 million to $1.2 million in 1980 to preserve a Trenton, NJ sewer as a historical monument.

In 2005 - $469,000 for the National Wildlife Turkey Federation in South Carolina

In 2005 - $100,000 for the Punxsatawny Weather Discovery Center Museum

In 2005 - $350,000 for the Inner Harmony Foundation and Wellness Center in Scranton, Penn.

In 2005 - $1,430,000 for various Halls of Fame, including $250,000 for the Country Music Hall of Fame and Museum in Nashville, Tenn., and $70,000 for the Paper Industry International Hall of Fame in Appleton, Wis.;


Spending our way to prosperity, one pork-barrel at a time!

Thu, 03/08/2012 - 05:10 | 2235206 Tompooz
Tompooz's picture

"   The National Endowment for the Humanities for a $25,000 grant in 1977 to study why people cheat, lie and act rudely on local Virginia tennis courts." why did they??   and was it only on the tennis courts? Huh? Where is that $25000 answer?? 

Wed, 03/07/2012 - 11:58 | 2232261 SheepDog-One
SheepDog-One's picture

U.S. economic model now simply consists of fire hosing free money directly to banks at 0%, and tapping the strategic petro brilliant.

Wed, 03/07/2012 - 12:08 | 2232307 Moneyswirth
Moneyswirth's picture

It's the Amerikan way....

Wed, 03/07/2012 - 12:00 | 2232268 VulpisVulpis
VulpisVulpis's picture

Let's be honest -- the SPR is 'truly' meant for contingency situations for the military -- we can assume China's is meant for the same. However, just like Social Security, DC asshats are too busy dipping into the cookie jar for their own personal advantage.

Ants vs grasshoppers, people.

Wed, 03/07/2012 - 12:04 | 2232290 Offtheradar
Offtheradar's picture

Were so fucked.  We don't even know it. (except most ZH'ers)

Wed, 03/07/2012 - 12:10 | 2232319 Moneyswirth
Moneyswirth's picture

You would be correct, sir.  Truer words have not been spoken. 

Wed, 03/07/2012 - 12:05 | 2232293 TheSilverJournal
TheSilverJournal's picture

With the national emergency causing the releasing of the SPR being high gas prices, the SPR will be completely empty in no time.

Somebody please tell Obama that the purpose of the SPR is to stop America from being annahilated, not to hold down prices.

Wed, 03/07/2012 - 12:11 | 2232321 SheepDog-One
SheepDog-One's picture

ObaMao's main purpose IS to annihilate 'America'. Been trying to tell people that forever.

Wed, 03/07/2012 - 12:47 | 2232511 Silver Dreamer
Silver Dreamer's picture

Hell, I wouldn't be surprised to see a direct transfer from our so-called SPR right into China's.

Wed, 03/07/2012 - 13:24 | 2232656 Ace Ventura
Ace Ventura's picture

I wouldn't be surprised if this hasn't been happening for some time. China has/is buying up large chunks of this country, it would be illogical to think they wouldn't buy access to our SPR as well.

Wed, 03/07/2012 - 12:08 | 2232299 Dr. Engali
Dr. Engali's picture

It is really pathetic watching our "leaders" do anything they can to hold on to the reigns of power. I wish they could see through the eyes of others just how feeble they look.

Wed, 03/07/2012 - 12:21 | 2232371 j0nx
j0nx's picture

Who are these 'others' you speak of. Short of the few measly tens of thousands of us on blogs like this that's about all the 'others' that I see that know the real score. The other 300+ million Americans are blissfully sleepwalking through life eating cheetos in their underwear and cackling at the antics of those zany kids from New Jersey. Hell after 160+k votes on cnn asking if we should use military might to stop Iran from developing nukes, over 65% of the respondents said yes. And that was on the most liberal news site in the world. Imagine what the fox news results would have been. 45% of Americans still ardently support Oblamebush. Forget it man, there is NO hope for people 'getting it'.

Wed, 03/07/2012 - 12:33 | 2232454 Dr. Engali
Dr. Engali's picture


"Short of the few measly tens of thousands of us on blogs like this that's about all the 'others' that I see that know the real score"

Those are the eyes I'm referring to. I know the rest aren't going to get it until it's too late. They are still arguing over which  color is better or blue.

Wed, 03/07/2012 - 13:13 | 2232607 KickIce
KickIce's picture

But I read ZH while I eat cheetos in my underwear.

Where do I stand?  Suddenly I'm so confused...  Maybe I should turn on CNBC to get the real news.

Wed, 03/07/2012 - 12:10 | 2232317 kito
kito's picture

and this is the reason why china's currency will be the most influential in 10 years. as i have said before, sadly, the u.s. can't see past its nose while china continues to build for the future..............

Wed, 03/07/2012 - 12:13 | 2232331 SheepDog-One
SheepDog-One's picture

You know what makes me laugh is people reply 'Oh yea well China doesnt dare to do shit to us we'll just beat em with our super kewl military' BLAH BLAH...hell all China would need to do is dump $500 billion in UST's on the open market overnite and the lights go out here in 'Merika.

Wed, 03/07/2012 - 12:29 | 2232426 Matt
Matt's picture

The Fed would just buy those Treasuries. The goal is to get American Workers, who feel they DESERVE a specific nominal wage, to be competitive with Chinese workers, while retaining their nominal pay / benefits / pension. China dumping UST might benefit this plan.

Wed, 03/07/2012 - 12:33 | 2232444 LawsofPhysics
LawsofPhysics's picture

This is a universal goal that all the "owners" of the world banks are trying to implement, social and environmental consequences be damned.  Glad to see more awakening.

Wed, 03/07/2012 - 13:53 | 2232773 espirit
espirit's picture

I don't know about the lights going out, PRC has investment interest in electrical generation.  Recent news about Progress Energy, Portuguese utilities, etc, suggests long term grip on the nads of what people consider a most important feature of a "modern lifestyle."

Wed, 03/07/2012 - 12:30 | 2232430 LawsofPhysics
LawsofPhysics's picture

China is already dumping treasuries like crazy.  If things are so "good" in China, then why do I recieve about 50 applications per month for the engineering positions I have?  Just curious.  I guess I'll find out in July when I am in Beijing.  Damn hard workers.  Not so innovative, but will run a process very efficiently.

Wed, 03/07/2012 - 12:30 | 2232410 LawsofPhysics
LawsofPhysics's picture

LOL!  Yeah, China's central banks never interfere in their currency markets.  What color is the fucking sky in your world?

Wed, 03/07/2012 - 12:10 | 2232318 caconhma
caconhma's picture

There is a clear failure of US policy in Syria. Sadad was capabale of destroying US/NAYO mercenaries and internal traitors/terrorists. It was done with Iran help.

Consequently, both Syria and Iran see clearly that anly brutal force and inflicting heavy losses on US/NATO they can prevail. As for Israeli, they only can fight unarmed civilians and pro-US Arab governments betraying its own people.

Lately Syria got a lot of Russian airdefense systems it will gladly share with Iran.

Finally, "official" Chinese defense budget exceeded $100B. Add to it:

  • Another ~$50B "unofficial" spending
  • Low cost labor and low cost production
  • Huge US expenses on foreign bases and wars

Consequently, very soon, Chineses defense expenses will exceed the US defense spending. As for quality, Chinese will "get" the latest US defense technology...

In a few years, the USA will be in terrible shit.

Wed, 03/07/2012 - 12:11 | 2232323 kraschenbern
kraschenbern's picture

My recollection is that the SPR is a STRATEGIC reserve, i.e. a national supply of readily available oil to fight a war if need be.  SO...If war (which might deny access to oil beyond our shores) is no longer in the cards - then oil is not so important.  World events suggest otherwise though. 

Wed, 03/07/2012 - 12:13 | 2232329 MrBoompi
MrBoompi's picture

Isn't it a given that we will take Iran's oil when we rid them of WMDs?  So what if there's a temporary "supply disruption"?  The price doubled after taking Iraq's oil and will probably double again if we take Iran's.  Do you think the energy companies are worried about the price?  As long as China can't buy iranian oil with Yuan or gold, don't you think the US government will pat itself on its back for a job well done?

Wed, 03/07/2012 - 12:19 | 2232363 Dr. Engali
Dr. Engali's picture

We aren't going to get the Iranian oil and gold. This will be one war to many. Not to mention it will be a proxy war with China.

Wed, 03/07/2012 - 12:23 | 2232379 GMadScientist
GMadScientist's picture

And hundreds of other angry bondholders and US financeers around the globe like Pootie Poot.

You think Greece wants out of the Euro? Wait to you see countries scramble to get out of the petrodollar cartel company scrip!

Wed, 03/07/2012 - 12:55 | 2232535 Silver Dreamer
Silver Dreamer's picture

Iran's oil is not the objective.  Maintaining the petro dollar status is.  We could just as easily give all of Iran's oil contracts to China to achieve that goal.  It's just a theory...

Wed, 03/07/2012 - 12:59 | 2232550 Dr. Engali
Dr. Engali's picture

Like I said. One war too many. The petro dollar is doomed.

Wed, 03/07/2012 - 13:19 | 2232633 Silver Dreamer
Silver Dreamer's picture

I concur that it is doomed, and I definitely do not believe the effort to maintain it will be successful.  China may act as if it wants to help, but it is certainly snickering in private.  The Russians are loving it too.

Wed, 03/07/2012 - 12:15 | 2232340 Mike Cowan
Mike Cowan's picture

Heading to my Mandarin class.

Wed, 03/07/2012 - 13:40 | 2232713 Silver Dreamer
Silver Dreamer's picture

Russian is an excellent choice as well.

Wed, 03/07/2012 - 12:15 | 2232341 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

.....mean while all these ships are idling around the ME,...buring oil.....

Wed, 03/07/2012 - 12:18 | 2232350 Hugo Chavez
Hugo Chavez's picture

This isnt funny any more.

Anybody but Obamao.

Well anybody but Obamao, Santorum (the devil is everwhere), Gingrich, Romney. Did i miss anyone?

Wed, 03/07/2012 - 12:20 | 2232357 GMadScientist
GMadScientist's picture

LaRouche the Douche.

And Nader: I hate that fucking goodie two shoes.

Wed, 03/07/2012 - 12:48 | 2232512 mess nonster
mess nonster's picture

You missed Jeb Bush, lurking in the wings of a brokered convention.

Wed, 03/07/2012 - 12:57 | 2232541 Silver Dreamer
Silver Dreamer's picture

Changing nation state's head puppets will not help.

Wed, 03/07/2012 - 12:18 | 2232351 GMadScientist
GMadScientist's picture

"Oil's Well!!" - US

"You have something stuck in your Hormuz." - CHI(ra)NA


Wed, 03/07/2012 - 15:16 | 2233093 falun bong
falun bong's picture

My favorite is the Hormuz Steak and Mashed Potato Microwave Meal

Wed, 03/07/2012 - 12:28 | 2232417 RSloane
RSloane's picture

Why are people so surprised when China behaves in the most efficacious fashion possbile, designed to push growth and security forward?

Wed, 03/07/2012 - 12:53 | 2232455 Flakmeister
Flakmeister's picture

Believe it or not, part of the answer is that the Chinese Bureaucracy rules things in a way that the short term gain of a few is subserviant to the goals of the collective... In other words, they are not going to let a few plutocrats enrich themselves in a manner that is detrimental to the long term goals... Moreover, they are absolutely ruthless in their pursuit of this policy...

Wed, 03/07/2012 - 12:28 | 2232418 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

the oily boid gets the woim

Wed, 03/07/2012 - 13:00 | 2232555 mess nonster
mess nonster's picture

US spr : As of May 31, 2011, the inventory was 726.5 million barrels (115,500,000 m3), on a total capacity of 727 million barrels. This equates to 34 days of oil at current daily US consumption levels of 21 million barrels per day.

Chinese spr: currently 101.9 million barrels, with a maximum capacity of 475.9 million barrels. Interim plans are to have  204 million barrels with the goal of increasing China's SPR to 90 days of supply by 2020.

Comment: Sitting at full capacity, and oil prices on the rise, someone in the US thinks this is a good time to make some money.

China on the other hand is trying to fill their reserves, at only 25% they have a way to go.

Of course, one looks at the fact that a topped-off SPR is only a month's supply at current rates of consumprion, and has to wonder, "Why do we want to attack Iran?"



Wed, 03/07/2012 - 13:09 | 2232585 Flakmeister
Flakmeister's picture

IIRC the SPR can only be accessed at a rate of ~2 mmbpd..

Wed, 03/07/2012 - 13:07 | 2232579 Flakmeister
Flakmeister's picture

Ah... a trip down memory lane....

April, 2004: Saudi Oil Is Secure and Plentiful, Say Officials

“Saudi Arabia now has 1.2 trillion barrels of estimated reserve. This estimate is very conservative. Our analysis gives us reason to be very optimistic. We are continuing to discover new resources, and we are using new technologies to extract even more oil from existing reserves,” the minister said.

Naimi said Saudi Arabia is committed to sustaining the average price of $25 per barrel set by the Organization of the Petroleum Exporting Countries. He said prices should never increase to more than $28 or drop under $22. “This is a fair price to consumers and producers. But, really, Saudi Arabia and OPEC has limited control on world markets,” said Al-Naimi. “Prices are driven by other factors: Instability in key oil producing countries; industry struggles to produce specialized gasoline; and the resulting strains on refineries to meet local demand.”

“Saudi Arabia’s vast oil reserves are certainly there,” Naimi added. “None of these reserves requires advanced recovery techniques. We have more than sufficient reserves to increase output. If required, we can increase output from 10.5 million barrels a day to 12-15 million barrels a day. And we can sustain this increased output for 50 years or more. There will be no shortage of oil for the next 50 years. Perhaps much longer.”

Wed, 03/07/2012 - 13:18 | 2232625 KickIce
KickIce's picture

I think this is a Rothchild fear, that one of the CBs would go off the reservation...  China seems to be doing so by putting more emphasis on commodities than fiat.  Russia probably belongs in this category as well.  One things for sure, it ends with WW3.

Wed, 03/07/2012 - 13:28 | 2232666 KingdomKum
KingdomKum's picture

       Honestly,  how many posters on this blog are un/under-employed English Majors ?



Wed, 03/07/2012 - 13:49 | 2232753 HungrySeagull
HungrySeagull's picture

We cannot be this stupid.

Must not.

Wed, 03/07/2012 - 14:04 | 2232820 waterwitch
waterwitch's picture

I like Mike Ruppert's idea of having a second, full SPR that only municipalities can access for true emergencies. Currently they can't directly access the SPR because it is in the control of the Feds.

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