Posted on 08/31/2005 4:33:08 AM PDT by BulletBobCo
Price controls would fail, just as they did in the 70's when Nixon tried to use them.
People rushing to top off their tanks will only makes the situation worse. They think they'll avoid the higher price, all the while CAUSING the higher price.
The reserves were not intended to be used to ease the cost of gasoline to the public...
Releasing any amount (from the strategic reserves) will not do anything to make that cost go any lower for any of us...
Releasing oil from the reserves is a matter of opening a few valves. Restarting production from offshore platforms is a lot trickier. Considering that most of the oil production in the Gulf of Mexico (one quarter of US domestic oil production) had to be shut in due to the storm, I think it does make sense.
Care to be specific?
Debate Over When to Use the Reserve
A debate during the 1980s over when, and for what purpose, to initiate a drawdown of SPR oil reflected the significant shifts that were taking place in the operation of oil markets after the experiences of the 1970s, and deregulation of oil price and supply. Sales of SPR oil authorized by the 104th Congress -- and in committee in the 105th -- renewed the debate for a time. The intended use of the SPR has become an issue again, beginning with the rise in home heating prices during the winter of 1999-2000.
The SPR Drawdown Plan, submitted by the Reagan Administration in late 1982, provided for price-competitive sale of SPR oil. The plan rejected the idea of conditioning a decision to distribute SPR oil on any "trigger" or formula. To do so, the Administration argued, would discourage private sector initiatives for preparedness or investment in contingency inventories. Many analysts, in and out of Congress, agreed with the Administration that reliance upon the marketplace during the shortages of 1973 and 1979 would probably have been less disruptive than the price and allocation regulations that were imposed. But many argued that the SPR should be used to moderate the price effects that can be triggered by even small shortages (like those of the 1970s or the tight inventories experienced during the spring of 1996) and lack of confidence in supply availability. Early drawdown of the SPR, some argued, was essential to achieve these desirable objectives.
The Reagan Administration revised its position in January 1984, announcing that the SPR would be drawn upon early in a disruption. This new policy was hailed as a significant departure, easing considerably congressional discontent over the Administration's preparedness policy, but it also had international implications. Some analysts began to stress the importance of coordinating stock drawdowns worldwide during an emergency lest stocks drawn down by one nation merely transfer into the stocks of another, and defeat the price-stabilizing objectives of a stock drawdown. In July 1984, responding to pressure from the United States, the International Energy Agency (IEA) agreed "in principle" to an early drawdown, reserving decisions on "timing, magnitude, rate and duration of an appropriate stockdraw" until a specific situation needed to be addressed.
This debate was revisited in the aftermath of the Iraqi invasion of Kuwait on August 2, 1990. The escalation of gasoline prices and the prospect that there might be a worldwide crude shortfall approaching 4.5-5.0 million barrels daily prompted some to call for drawdown of the SPR. The debate focused on whether SPR oil should be used to moderate anticipated price increases, before oil supply problems had become physically evident.
In the days immediately following the Iraqi invasion of Kuwait, the Bush Administration indicated that it would not draw down the SPR in the absence of a physical shortage simply to lower prices. On the other hand, some argued that a perceived shortage does as much and more immediate damage than a real one, and that flooding the market with stockpiled oil to calm markets is a desirable end in itself. From this perspective, the best opportunity to use the SPR during the first months of the crisis was squandered. It became clear during the fall of 1990 that, in a decontrolled market, physical shortages are less likely to occur. Instead, shortages are likely to be expressed in the form of higher prices as purchasers are free to bid as high as they wish to secure scarce supply.
Within hours of the first air strike against Iraq in January 1991, the White House announced that President Bush was authorizing a drawdown of the SPR, and the IEA activated the plan on January 17. Crude prices plummeted by nearly $10/barrel (bbl) in the next day's trading, falling below $20/bbl for the first time since the original invasion. The price drop was attributed to optimistic reports about the allied forces crippling of Iraqi air power and the diminished likelihood, despite the outbreak of war, of further jeopardy to world oil supply; the IEA plan and the SPR drawdown did not appear to be needed to help settle markets, and there was some criticism of it. Nonetheless, more than 30 million barrels of SPR oil was put out to bid, and 17.3 million barrels were sold and delivered in early 1991.
The Persian Gulf War was an important learning experience about ways in which the SPR might be deployed to maximize its usefulness in decontrolled markets. Legislation enacted by the 101st Congress, P.L. 101-383, had liberalized drawdown authority for the SPR to allow for its use to prevent minor or regional shortages from escalating into larger ones; an example was the shortages on the West Coast and price jump that followed the Alaskan oil spill of March 1989. In the 102nd Congress, omnibus energy legislation (H.R. 776, P.L. 102-486) broadened the drawdown authority further to include instances where a reduction in supply appeared sufficiently severe to bring about an increase in the price of petroleum "severe" enough to "likely . . . cause a major adverse impact on the national economy."
A new dimension of SPR drawdown and sale was introduced by the Clinton Administration's proposal in its FY1996 budget to sell 7 million barrels to help finance the SPR program. While agreeing that a sale of slightly more than 1% of SPR oil was not about to cripple U.S. emergency preparedness, some in the Congress vigorously opposed the idea, in part because it might establish a precedent that would bring about additional sales of SPR oil for purely budgetary reasons, as did indeed occur. There were three sales of SPR oil during FY1996. The first was to pay for the decommissioning of the Weeks Island site. The second was for the purpose of reducing the federal budget deficit, and the third was to offset FY1997 appropriations. The total quantity of SPR sold was 28.1 million barrels, and the revenues raised were $544.7 million.
http://science.howstuffworks.com/framed.htm?parent=question478.htm&url=http://www.ncseonline.org/NLE/CRSreports/energy/eng-23.cfm?&CFID=16273838&CFTOKEN=23815498
Ok, there's no shortage. You must be right. All the oil analysts and the government who publish figures on reserves are involved in one big conspiracy. We lost 10-25% of our refining capacity, but there is no shortage now or in the future of refined product. You've got to be kidding.
Until we all get serious about conservation (and maybe public transportation/carpooling/bikes, etc.), things will only get worse. We can all do our share and perhaps begin to make a difference.
I agree this is an issue, but it has absolutely nothing to do with our current price levels. Look, if we 'refining' was a definite issue, that means we would not be 'refining enough', which means we wouldn't have 'enough' refined gasoline in the market place, which means that we would not have 'enough' gas at the pump to meet our demand - and you would then start to see 'lines at the pump' because stations would not have 'enough' to pump into everyone's gas tank to meet demand.
There are no current 'refining capacity' shortages, because you can get all the gasoline you need at the pump. If there is a "shortage" tell me what part of the country there are 'lines' at the pump.
Ok, if there is A "SHORTAGE" (i.e insufficient capacity), tell me "WHERE" you see that gas lines!
Did you read my post at all? The prices are spiking NOW to slow down people's consumption for the inevitable shortages that will result from so much loss in refining capacity. Will there or will there not be less refined product in the coming weeks and months until these refineries are back online? Will that not cause shortages, rationing, etc?
You're dense. There are no lines now, unless you want to count people filling up ahead of expected price increases. Our local paper today said that some stations in Milwaukee ran out of regular unleaded gas yesterday and many will not be re-supplied until Thursday. If they do not increase the price to slow demand at a time when we are going to have massive fall-off in production, there will be shortages, and massive ones.
Last time I checked, there was a war going on in Iraq.
Have those printed up, and put me down for two!
That is a fantastic idea. Unfortunately, it won't happen. If the feds lowered or, radical(!)=> suspended taxes on gasoline for a month or so, the snoozing sheeple would suddenly realize how much they are being gouged by our government.
Can't have that! Can't have awake, alert constituents. Why, if we had that the political scumbags might actually have to trim their pork intake (highway bill, which is funded mostly through gas taxes). Can't have that. No way, no how!
You forget the George Bush strategery at work.....
Politically, he must be seen as doing something. He held off all calls for releasing oil when the price was climbing due to market conditions. This is not a war, but it is a natural disaster where everybody looks to the White House for help.
When this release of oil has little or no effect on the price at the pumps, Bush should tell the nation that this is why he resisted doing this to lower gas prices earlier this year.
A clever politician will introduce a bill right now, something named the "Emergency Hurricane Relief Bill" that would contain money and other aid, but also emergency lifting of regulations for refinery construction and drilling for domestic oil.
Let's see the liberals fight that with gas going up by $0.25 per gallon per day.
Ok, do you mean that the prices are 'spiking now' (post-Katrina) from my local's last week's 2.50/gal to today's 2.69/gal - because of "so much loss in refining capacity"?
Look, remember the prices shot up in 2000 from 1.10 to over 1.50 (no gas line shortages I could recall), continuing through the last 4 yrs to last week's 2.50 (no gas line shortages I could recall).
All you have to do is look.
We have been able to refine all the gasoline that we have needed. What are you saying then, that if we had nore refineries we would then 'refine more' gasoline than what we need? For what reason, just to build up more inventories?
" I am not a 'wacko', and don't perscribed to Gore's past crazy schemes."
Could you possibly have meant "subscribe" instead of perscribe"?
I love tax cuts any way I can get them, but the idea right now is that people need to curb their consumption. In Wisconsin, there is about $.45/gallon combined state and federal gas tax. If that were to be eliminated, people would just continue to consume as they have been. Until this crisis passes, we need to lower our consumption.
This is a good move, by President Bush,
exactly what the SPR was intended for.
I don't believe all the crap talk about 'refinery shortage'.
Until last year, the wholesale price of gasoline v the
price of crude, was reasonable.
With high prices, airlines will conserve, by
going bankrupt, third worlders will conserve, by starving,
New Englanders will conserve heating oil, by shivering,
all those, reducing pressure on refining capacity.
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