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:


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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Rastadamus's picture

Burn Greece instead.

Silver Dreamer's picture

1 million barrels would make a lot of Greek Fire.

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?

kaiserhoff's picture

It is tahm for a chaynge. 

                William Rufus Clinton

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

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...

CrashisOptimistic's picture

So basically Chu jawboned $1.50 off WTI today.


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.

Flakmeister's picture

Talking your book of SASOL shares??

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

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.

Flakmeister's picture

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

tmosley's picture

They produce 130,000 barrels per day as their baseline (according to 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.

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.

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....

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.

kaiserhoff's picture

Reading comprehension skills are good to have.

cossack55's picture

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

Problem Is's picture

You maybe a Domestic Terrorist if...

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

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 ...

flying dutchmen's picture

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

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.

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.

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..

azusgm's picture

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

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.

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?

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.....

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. 


Banksters's picture

350 miles? pffft

troll harder, dufus!

sun tzu's picture

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

falak pema's picture

burn grease instead.

Corn1945's picture

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

The Big Ching-aso's picture



Chu on this right here.

Raging Debate's picture

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

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.

bdc63's picture

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

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?

FlyingPurpleSheepleEater's picture

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

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?

Manthong's picture

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

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.

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.

FlyoverCountrySchmuck's picture

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

The time for "Going Galt" has arrived.

Gene Parmesan's picture

It's no wonder people hate politicians so passionately.

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?