Posted on 04/26/2006 7:26:11 AM PDT by Tolerance Sucks Rocks
The Strategic Petroleum Reserve has been almost uniformly embraced by politicians and energy economists as one of the best means to protect the nation against oil supply shocks. This study finds little evidence for the proposition that government inventories are necessary to protect the country against supply disruptions. Absent concrete market failures, government intervention in oil markets is unlikely to enhance economic welfare.
A conservative estimate finds that the SPR has cost taxpayers at least $41.2–$50.8 billion (in 2004 dollars), or $64.64–$79.58 per barrel of oil deposited therein. Accordingly, the "premium" associated with the insurance provided by the SPR is quite high relative to market prices for oil, even during 2005.
The SPR has been tapped only three times, and in each of those instances, the releases were too modest and, with the exception of the 2005 release related to Hurricane Katrina, too late to produce significant benefits. Accordingly, the costs associated with the SPR have been larger than the benefits thus far.
The SPR insurance policy is unlikely to pay off in the future either. First, major oil supply shocks are much rarer than many observers believe. Second, the executive branch has been unwilling to use the reserve as quickly and robustly as economists recommend. Third, the benefits from a release are almost certainly overstated.
Policymakers should resist calls to increase the size of the reserve and instead sell the oil within the SPR and terminate the program.
And here I thought the The Strategic Petroleum Reserve was for STRATEGIC purposes, ie. military or national defense, not for some weenies complaining about the price of a gallon of gas.
I never thought that the Strategic Petroleum Reserve was created as an economic tool, but rather a reserve for a time of war. In a major world-war type conflict, where no oil could get here from the oil-rich middle east, it would be a good thing to have a supply of oil to fuel our tanks and armored personnel carriers. I think it was Clinton who first used the Strategic Petroleum Reserve as an economic tool, in much the same way as he drew down our military and spent the "peace dividend" on stupid social programs. So a libertarian arguing against it can do so on economic grounds and find no objections here, but let's not just get rid of it as if it were a cave full of USDA cheese.
It's Cato. They'd be happy if the SPR were eliminated, thus hindering our ability to handle ourselves militarily. One of their policy goals is peace abroad, seemingly at any cost, because it's better for market forces.
Probably not. Coming from Cato, these guys take a strong libertarian view on such things, and thus has a prediliction against ideas that are not driven by strictly free-market considerations. Given the typical big-L Libertarian idiocy on all matters military, I wouldn't trust these guys to give it an honest assessment even if they did attempt to cover it.
The very first thought that popped into my head. Hence the term "strategic".
They most certainly would.
I am in awe of their logic in the following quote ...
"Absent a naval blockade shutting down U.S. ports, the near disappearance of maritime oil transport, or a complete international boycott of oil sales to the United States, foreign oil will always be available to U.S. consumers."
BTW ... After a skim read of this "report" I found nothing concerning militarily usage.
But then to be on the left indicates a an abnormal desire to be a sacrificial lamb for the lion. ;)
I suspect you to be correct.
If the Navy thinks it makes more sense to rely on domestic production, Canada and Mexico then to have their own reserves, Cato may have a point. Pumping oil out of the former Naval oil reserves while at the same time pumping oil into the SPR -- why couldn't they just leave the Naval reserves alone and eliminate the middle man???
(1998 -- sounds like another part of the "Clinton legacy" -- but the selloff certainly DOES post-date the SPR.)
Cato doesn't deserve complete excoriation they do not hide who they are and when they write they offer the sources for those facts. We don't always have to agree with their conclusions.
The SPR is a good thing.
Iran wants a fight?
Crush them,
Salt their land
Take their oil.
W
Exactly. The Reserve is for Military use.
Ah ... yes
Like the Brookings Institute, or the Ford Foundation, or ... ;)
I thought the The Strategic Petroleum Reserve was for STRATEGIC purposes, ie. military or national defense..
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Correct. It was never intended to serve as backdoor escape mechanism for weinies (elected officials) owned by the envirowacko movement who have only sought to block development of reserves of natural resources already existent here in the "Homeland".
It's a shame that the big-L Catos are SO close, yet SO far.
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