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US Weighing Usage Of Strategic Petroleum Reserve

Tyler Durden's picture




 

Last week we joked that for every downtick in the Obama popularity rating (due to record February gas prices) we would see at least 1 million barrels released from the Strategic Petroleum Reserve. Sure enough, humor promptly becomes reality in United Banana States of Amerika:

  • CHU SAYS U.S. WEIGHS USING STRATEGIC PETROLEUM RESERVE
  • CHU SAYS U.S. IS `VERY CONCERNED' ABOUT EVENTS IN IRAN

So following the Transcanada fiasco, China is now doubly delighted that it will be able to buy even more cheap crude at America's expense. And yet one wonders why the SPR release: after all didn't we learn just today that Americans have not been more confident in years?

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Tue, 02/28/2012 - 17:43 | 2205732 Rastadamus
Rastadamus's picture

Burn Greece instead.

Tue, 02/28/2012 - 17:44 | 2205744 Silver Dreamer
Silver Dreamer's picture

1 million barrels would make a lot of Greek Fire.

Tue, 02/28/2012 - 17:51 | 2205782 JPM Hater001
JPM Hater001's picture

Well, I for one dont know how they are going to war with Iran when we're using the reserve for our vacations. 

How's that gonna work?

Tue, 02/28/2012 - 17:59 | 2205819 kaiserhoff
kaiserhoff's picture

It is tahm for a chaynge. 

                William Rufus Clinton

http://www.mediaclubsouthafrica.com/index.php?option=com_content&view=ar...

A bit hyped.  The Germans did this during WWII with pretty good results.

Tue, 02/28/2012 - 18:05 | 2205847 Flakmeister
Flakmeister's picture

You gotta be joking....  "pretty good results" now that is funny, I think the cabs in NYC use the equivalent of what Germany was producing daily at Leuna...

Tue, 02/28/2012 - 18:09 | 2205862 CrashisOptimistic
CrashisOptimistic's picture

So basically Chu jawboned $1.50 off WTI today.

 

Tue, 02/28/2012 - 18:19 | 2205892 Flakmeister
Flakmeister's picture

Yep...

Wonder what he will do for the $5...  Make nice noises about ANWR??

Tue, 02/28/2012 - 18:28 | 2205931 tmosley
tmosley's picture

South Africa has commercialized it with quite a bit of success.

But I'm sure they'll be stone dead in a moment.

Tue, 02/28/2012 - 18:50 | 2206013 Flakmeister
Flakmeister's picture

Talking your book of SASOL shares??

Could you remind me of the circumstances underwhich SASOL came into being?

Tue, 02/28/2012 - 19:02 | 2206055 tmosley
tmosley's picture

Eh?  I don't own paper of any type.

And who cares about how they were formed 60 years ago?  They produce fuel from natgas and coal NOW.  It is commercially viable.  Their revenues are about 2% of S. African GDP.  Not exactly peanuts.  And they are expanding into other countries now.

Stop trying to sidestep the issue.

Tue, 02/28/2012 - 19:23 | 2206124 Flakmeister
Flakmeister's picture

Great... remind me what their production is and how long they were subsidized and why?

Tue, 02/28/2012 - 19:50 | 2206181 tmosley
tmosley's picture

They produce 130,000 barrels per day as their baseline (according to http://www.sasol.com/sasol_internet/downloads/Sasol_Limited_interim_fina... though you must convert tons/year into barrels per day yourself).  While South Africa consumes 530,000 barrels per day.

I don't know anything about their subsidies.  But that doesn't change the fact that they produce almost a quarter of the oil used in South Africa.

But hey, feel free to ignore it.  Surely if you ignore it, it will go bankrupt.

Tue, 02/28/2012 - 19:57 | 2206196 magpie
magpie's picture

I think the main hindrance is that they aren't run by playboy petromonarchs with a penchant for investing in US treasuries.

Tue, 02/28/2012 - 20:21 | 2206252 Flakmeister
Flakmeister's picture

130,000 bbpd... wow...

Can you tell me about their CAPEX and cost per barrel of marginal production? IIRC, it is roughly $100,000 per bblpd...

Their production is about ~0.7% of US consumption...

Run a simple Excel model using their CAPEX numbers and what not and ramp up the FT process so as to provide the US with 10% of consumption....

You might then realize why only the USAF is looking at such a process... cost be damned...

You truly are incapable of looking at anything in depth....

Tue, 02/28/2012 - 23:05 | 2206681 tmosley
tmosley's picture

Right, they spend $25000 /bblpd for their oil, with 3/4 coming at normal costs, and 1/4th coming 1000 times normal cost.

Tell more lies.

Tue, 02/28/2012 - 19:04 | 2206061 kaiserhoff
kaiserhoff's picture

Reading comprehension skills are good to have.

Tue, 02/28/2012 - 18:02 | 2205836 cossack55
cossack55's picture

Solar-powered drones.  All the ones that burn fuel will be in the USSA spying on RP voters.

Tue, 02/28/2012 - 22:45 | 2206608 Problem Is
Problem Is's picture

You maybe a Domestic Terrorist if...

You believe in chemtrails, gold or Ron Paul...

Tue, 02/28/2012 - 18:06 | 2205846 bdc63
bdc63's picture

Dennis-the-Menace Gartman is on CNBC and just said that crude prices are in the process of rolling over and coming down ... and we all know how good his track record is ...

Tue, 02/28/2012 - 19:21 | 2206119 flying dutchmen
flying dutchmen's picture

Denis GArtman sucks ...  his funds sucks , his recommendations suck.  we he even gets air times is amazing...

Tue, 02/28/2012 - 19:08 | 2206077 fourchan
fourchan's picture

the majors are shipping oil and refined out of the usa, its rediculous.

 

thats why even though we are using 30-55% less gas the priceses are realentlesly going higher.

Tue, 02/28/2012 - 19:46 | 2206165 alex_g
alex_g's picture

The gulf coast refineries are using excess capacity to buy raw material, add value by refining it, then export it.  At a good profit.  Sounds like a good business practice to me.  Prices are going higher because the raw material is going higher, nothing more, nothing less.

Tue, 02/28/2012 - 18:12 | 2205861 whatsinaname
whatsinaname's picture

Has the SPR been loading up on its reserves between its last sales prior to the holidays and now ? If yes, has the SPR been buying crude all the way from $80 to $100+ ? They stand to make a profit on that ?? just wondering how the process works..

Tue, 02/28/2012 - 23:34 | 2206759 azusgm
azusgm's picture

Don't want to be hitting anymore debt ceilings until after the 1st Tuesday in November.

Tue, 02/28/2012 - 18:19 | 2205889 battle axe
battle axe's picture

They know the war is  coming and are setting it up so that gas does not go to $10 a gallon, but what if the Israelis use tactical nukes? ooops.

Tue, 02/28/2012 - 18:28 | 2205915 CrashisOptimistic
CrashisOptimistic's picture

Look at a map.

Israeli jet fighters have a 350 mile range.  The trip from Israel to Iran is 2000 miles round trip.  They have a primitive air to air refueling capability that would require the tankers to traverse into and loiter over hostile (Saudi Arabia or Iraq and Jordon or Syria) airspace for hours.

And when you get there you find the nuclear program is broadly spread out geographically.  There's no one target to hit.

Then there's China, now getting a nice discount on Iranian oil imports and developing a nice secure relationship with their cutrate supplier.  Maybe they will send some anti air equipment to Iran and troops to man it.  An entirely defensive, non aggresive action.

Since you have to knock down the air defense network before you can hit targets, that means you orchestrate 2+ air to air refuelings each way (presuming that the permission gathering process in Iraq and KSA doesn't warn the Iranians) and then when you get there you bomb Chinese troops.

Do you really see this happening?

Tue, 02/28/2012 - 18:40 | 2205975 Boondocker
Boondocker's picture

In what world does any F-15 have a 350 mile range?  I know we have wasted a pile of money on aircraft, but that isn't one of the F 15s problems.....

Tue, 02/28/2012 - 18:41 | 2205977 battle axe
battle axe's picture

The  Israelis use the  F-15I which has conformed fuel tanks that  run along the length of the aircraft, these extra fuel tanks give their F-15's greater range much like our F-15E "strike eagles". They will be able to make it all the way with a tactical nuke and hit there target with minimal in air refueling. Also the Saudi ruling family hates Iran more then Israel and have already given them the "thumbs up" to use their airspace. Remember, Saudi's are Sunni while Iranians are Shia, and they hate each other. Also Iranians are not considered Arabs they are considered Persians and the Arabs hate them, a lot of history there. 

 

Tue, 02/28/2012 - 19:10 | 2206088 fourchan
fourchan's picture

great post

Tue, 02/28/2012 - 19:13 | 2206102 Banksters
Banksters's picture

350 miles? pffft

troll harder, dufus!

Tue, 02/28/2012 - 21:01 | 2206346 sun tzu
sun tzu's picture

You're stupid. Israel is about 1,500km from Tehran. The combat radius of the F15 is nearly 2,000km 

Tue, 02/28/2012 - 17:43 | 2205736 falak pema
falak pema's picture

burn grease instead.

Tue, 02/28/2012 - 17:43 | 2205738 Sophist Economicus
Sophist Economicus's picture

Chu says "Gesundheit"

Tue, 02/28/2012 - 17:43 | 2205742 Corn1945
Corn1945's picture

This is actually something that I would be BTFD on all day long. Let Bernanke try to print oil...

Tue, 02/28/2012 - 17:45 | 2205746 The Big Ching-aso
The Big Ching-aso's picture

 

 

Chu on this right here.

Tue, 02/28/2012 - 18:26 | 2205919 Raging Debate
Raging Debate's picture

I dunno if I can do that because two wongs don't make a wight.

Tue, 02/28/2012 - 17:45 | 2205750 Gringo Viejo
Gringo Viejo's picture

They'll drain every bit of it right into November for political reasons.

Come December, we'll be paying $8 a gallon.

Tue, 02/28/2012 - 18:06 | 2205825 bdc63
bdc63's picture

Yeah, but then is will be the Republican's fault/problem again ;)

Tue, 02/28/2012 - 18:00 | 2205826 Uber Vandal
Uber Vandal's picture

Not only that, but how much will it cost to replenish, and will the product actually be there to replenish it?

Tue, 02/28/2012 - 17:47 | 2205760 FlyingPurpleShe...
FlyingPurpleSheepleEater's picture

It'll be like throwing a glass of water into a blast furnace. 

Tue, 02/28/2012 - 17:47 | 2205761 Conrad Murray
Conrad Murray's picture

The current administration(and nearly every one before it) is dead set on destroying, pardon, fundamentally transforming, America. Nobody dared question what was meant by that when Barry O'Dumbo the Irish Indonesian said it, but, now, as the truth comes out, what will the slaves do?

Tue, 02/28/2012 - 17:52 | 2205779 Manthong
Manthong's picture

Fundamental transformation is creative destruction from the administration's national socialist perspective.

Tue, 02/28/2012 - 20:07 | 2206221 samwell
samwell's picture

O dingo is going to use the SPR as a little re-election slush fund to try and calm the oil junkie US.  if they are considering releasing it now, what will be left once the war mongering zionist ( ie racist) jews of israel and the US succeed in their fascist dream of unprovoked bombing of Iran.  The zionist jews in Israel are the real threat to world peace.  They are the onces armed with over 300 nukes.  Iran is no threat.  they have not attacked another country in the last 200 yrs.  the zionist jews on the other hand... all they know how to do is attack their neighbors in the middle east.  they are a cult of racist pussies  who are addicted to murder, death, mayhem, and bringing about the end of the world!  I have had enough of their bullshit.  I too am concened about what israel is up to in Iran.

Tue, 02/28/2012 - 17:49 | 2205767 Cdad
Cdad's picture

And even more ridiculous...the fascist government now having entirely embraced its inner banana republic nature, no oil need be released from the SPR at all...but only considered or "weighed" with public statements.  As we all now know, public statements from corrupt politburo types is the greatest investment catalyst of all, inverse or otherwise.

As the rabbit hole has gotten deeper and deeper, it is my opinion that this nation of sheep has now seen the situation pass the tipping point.  And everything that is about to happen within the borders of this once great nation will be very much deserved.

Tue, 02/28/2012 - 17:54 | 2205793 FlyoverCountryS...
FlyoverCountrySchmuck's picture

It's too late to save the Sheeple, I'm afraid.

The time for "Going Galt" has arrived.

Tue, 02/28/2012 - 17:50 | 2205772 Gene Parmesan
Gene Parmesan's picture

It's no wonder people hate politicians so passionately.

Tue, 02/28/2012 - 17:50 | 2205775 css1971
css1971's picture

Yo Chu! I'm long NG. Throw a few billion at CNG vehicles.

 

Or do I need to be JPM/Goldman for that to work?

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