Hurricane Katrina seems to have created a situation in which I will finally agree that a release from the Strategic Petroleum Reserve would be appropriate:
The storm already forced the shutdown of an estimated 1 million barrels of refining capacity along the nation’s Gulf Coast.
Administration officials, speaking on the condition of anonymity because they were not authorized to speak publicly, said Bush seemed likely to authorize a loan of some oil from the Strategic Petroleum Reserve. But details remained in flux and no decision was imminent, they said.
The expected move would be designed to give refineries in the area a temporary supply of crude oil to take the place of interrupted shipments from tankers or offshore oil platforms affected by the storm. It would not be intended to keep a lid on soaring gasoline prices.
White House spokesman Scott McClellan, speaking with reporters aboard Air Force One as the president flew from his Texas ranch to Arizona, said the Energy Department was still assessing the situation before making a recommendation on the reserve.
“Obviously, the Strategic Petroleum Reserve is there for emergency situations, and that would include natural disasters,” McClellan said. “But it’s just too early to know at this point.”
In 2004, the president authorized loans from the reserve to help refiners make up for missing supplies when Hurricane Ivan struck.
I agree.
Mr Furious
Yup. Except it should only be used if there really is a shortage, and it really will make a difference. The price of oil already jumped in anticipation of the hurricane, and the last thing I want to see is SPR oil entering the supply chain allowing oil companies to reap extra profits by keeping prices artificially high—effectively making extra money off the Reserve.
Check that, the last thing I want to see is this catastrophe. But the thought of gouging people on top of it outrages me.
Rick
I dunno; as a Republican, I wanna keep the reserve untapped until my public-service peeps can become embroiled in another Teapot Dome unpleasantness.
Honoring my party’s traditions.
Cordially…
TallDave
Yeah, I have to agree. This is a legitimate short-term use.
Hey, I wonder how much more all that oil is worth now than when we bought it? Hehe.
M. Scott Eiland
Of course, this scenario only works if the refineries themselves aren’t put out of commission by Katrina.
ppGaz
I don’t remember the numbers, but it seems to me that the SPR would create rather minor fluctuation on the radar of supply, demand and prices.
The oil business is a pretty straightforward cash-based, supply-demand market. I don’t think it responds that well to desultory manipulation. I’d wager that the biggest effect of releasing from SPR would be that the reserves would be repurchased at a higher price than the price paid for the spent reserves in the first place ….. and the consumer would hardly feel a thing.
KC
Hmmm . . . ppGaz I think you make a good point.
BinkyBoy
The SPR is being used as a Cheney life sustaining vehicle.
He has to have his 200 gallon crude oil bath daily or he’ll have problems grunting the next day.
jobiuspublius
Don’t be surprised if this gets spun into, “Must have more ANWAR.”
jaime
“The oil business is a pretty straightforward cash-based, supply-demand market.”
Don’t you mean a ‘Supply-demand and egregious and unnecessary governemnt subisdy magnet’?
Demdude
I don’t think it will hurt. The market generally responds to any type of disruption of the flow of crude with a violent upswing in the price. If even the threat of a release of a major amount of crude holds the price down (or level), not a bad thing.
Narvy
I heard or read somewhere(boy, that’s authoritative), perhaps NPR, that the US doesn’t have enough refinery capacity for the grade of oil in the reserve to process it in sufficient quantities to make a difference quickly. I don’t know what to believe; I hope someone in the administration knows something about the oil business.