Pelosi Asks Bush to Draw From Petroleum Reserve to Combat Surge in Oil Prices

[wmenorr67]

House Speaker Nancy Pelosi asked President Bush on Tuesday to draw down a portion of the country's Strategic Petroleum Reserve as a way to reduce crude prices and help motorists who are suffering from the rising cost of gasoline.

The House Republican leadership responded to Pelosi's proposal by noting that she was supporting a supply increase  something the Republicans have rallied behind in the form of increased offshore drilling, which the Democrats oppose.

Pelosi's proposal, contained in a letter to President Bush, comes as Americans continue to face average unleaded gas prices over $4 a gallon. The increases have followed a surge in the price of crude oil on world markets, though crude eased $5 on Tuesday to close at $136 a barrel for the day.

"The severe energy price crisis facing millions of Americans compels strong presidential action to assist consumers and strengthen the economy," Pelosi said in her letter, which asked Bush to "draw down a small portion" of the country's oil reserve.

Pelosi citthe threat of a home-heating oil crisis.

She also noted that Bush drew down on the reserve in 2005 after Hurricane Katrina, and since then the reserve has increased to 702 million barrels, or 97 percent full.

Last month, President Bush called on Congress to repeal the 27-year-old ban on new offshore drilling to address the fuel crisis, a proposal that gained no traction with the Democratic leadership.

House Minority Leader John Boehner said he agrees "more supply is necessary," which is why Republicans "have been arguing for decades in favor of more American energy production."

Pelosi's proposal doesn't go far enough, Boehner said.

"Republicans stand ready to work across the aisle on a real solution to our energy crisis: an all-of-the-above plan that increases production of American energy, encourages conservation and promotes alternative fuels," he said in a written statement.ed historical examples of such moves in times of uncertainty, from the elder President Bush's use of some of the reserve's oil leading up to the first Gulf war to a similar measure by President Clinton in 2000 to address

http://www.foxnews.com/story/0,2933,378241,00.html

Why don't they allow more drilling and refineries to be built?

[RaspberrySurprise]

If you solve the problem you can't whine about it anymore.

[Waitone]

Idiocy!

[El Tejon]

El Tejon asks Pelosi to start drilling in Alaska and in our fish toilets as we tried to do back in 2002 but you moronic Democrats blocked drilling.

[HankB]

Did Ms. Pelosi ever get assigned the 757 fuel hog she wanted when she became Speaker, to replace the smaller jet (a Gulfstream?) the previous Speaker had been making do with?

[Firethorn]

At most, the reserve would be a short term fix to a more or less long term problem.

Personally, I heat with propane at the moment - I'm contacting an electrician to perform the necessary upgrades and install electric heat, because at $2.11/gallon, electricity is cheaper.

That leads to the true trick - high prices cause stress, before which people won't throttle their usage.  As is the extra expense(stress), many people who heat with oil/propane are going to be doing things to reduce their consumption, from things as simple as lowering the thermostat to adding insulation, switching to electric, even installing things like heat pumps or burning coal/wood.

Increased prices leading to more exploration and drilling to increase supply and decreased demand, until the two meet is the free economy.  The government can help by getting out of the way(IE allow drilling).  The strategic reserve is, at best, a very short term fix, and by reducing the stress, will actually stall adaption(people will put off getting off of oil heating), leading to even more increased prices and an empty reserve next year.

[MechAg94]

I think the purpose is to see that the reserve fuel is sold to certain people so they can make money reselling it.  There were a lot of discussions about that when Clinton did it. 

[Sergeant Bob]

I think the purpose is to see that the reserve fuel is sold to certain people so they can make money reselling it.  There were a lot of discussions about that when Clinton did it. 

Ya mean like when he sold the Naval petroleum reserve to Occidental Petroleum, of which, merely coincidentally, Algore just happened to own a half million in stocks?

Eyewash and political fodder for the Dems.

[longeyes]

I think Pelosi needs to look up the meaning of "strategic."

You don't use up your military rainy day fund because consumers can't get to the beach at will.

[Manedwolf]

I think Pelosi needs to look up the meaning of "strategic."

You don't use up your military rainy day fund because consumers can't get to the beach at will.

That IS her idea of strategic. Military is icky, it kills people and doesn't contribute to world peace.

[longeyes]

Yes, and she is either an idiot or has another, darker agenda.

Or maybe she's a hybrid.

[HankB]

I think the purpose is to see that the reserve fuel is sold to certain people so they can make money reselling it. 

I think it's so the democRATS can claim credit for a drop in gas prices between now and the November election . . . and hope that people won't take a look at how much they've risen just since Ms. Pelosi and Mr. Reid assumed their leadership positions in the Congress.

[StopTheGrays]

How many barrels of oil goes into the SOR every month? Instead of drawing from it, just do not add to it maybe?

[anygunanywhere]

How many barrels of oil goes into the SOR every month? Instead of drawing from it, just do not add to it maybe?

None is being added right now. Congress voted recently to stop because the price was too steep. IIRC 50,000 bbl/day was being added at a significant cost. The reserve capacity is in the high 90s percent range right now.

Anygunanywhere

[alex_trebek]

http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve

From wiki, so must be taken with a grain of salt:

Capacity: 726 million barrels

Current Stock: 700 million barrels (96%-97%)

Withdrawl Capability: 4.4 million barrels per day which makes this a 160 day supply based on withdrawl rate

The US imports 12 million barrels a day, so this is a 58 day supply based on demand.

********************

Not too long ago I started researching an idea.  The idea I had was using the oil reserve to wreak havoc on the oil market.  I was thinking that with an daily world demand of ~90 million barrels of oil, the US could sell the same amount on the open market for one day.  This would effectively cause the price per barrel to drop to at least 50% of the current market rate.  Of course this price drop would only be temporary, demand would fluctuate affecting the price.  Mainly this was an idea to punish speculators.  If they were to start loosing big time, it might force them to stop.  The idea was that the government buy and sell the oil reserve (sell high, buy low), the net result would probably cost money.  After the crude market fluctuations of extreme high and lows for weeks at a time, the market might reset to a more stable price. 

I really just started this for fun, and haven't really put too much thought into it, but one huge problem arose when looking into this: the withdrawl rate.  Since we can only move 4.8% of the worlds daily oil demand per day, it wouldn't really affect the price at all.  We would need the ability to move 10-20 times this amount to have any significant impact.  This is also the reason why Pelosi's is idiotic.  Her plan also wouldn't really have an effect until 3 months from now anyway.

AFAIK, the world demand needs to be used to determine oil prices, not the US demand. This is because the US is trading on the world market, and therefore at the world price.

[Firethorn]

AFAIK, the world demand needs to be used to determine oil prices, not the US demand. This is because the US is trading on the world market, and therefore at the world price.

Exactly.  I should note that a massive sell off of the reserves would only HELP speculators rather than harm them.  They'd simply hold off on selling for the duration and concentrate on buying.

And yes, oil is set by WORLD demand, not so much the US demand.  Yes, the US is the largest.  Still we only consume 20 million barrels a day, while the world as a whole consumes 82 million.  So even if we cut our usage in half it'd only be a 12% difference in the world market.

To highlight - If I remember right our demand has dropped something like 2% in the last year - but world demand has continued to rise.