Good idea or bad- Obama and switching oil in the strategic reserve

[VTmotoMike08 0]

I'm surprised there is not a thread on this already because it is already over a week old.

http://www.reuters.com/article/politicsNews/idUSWAT00987320080804
Also on Obama's site: http://my.barackobama.com/page/content/newenergy

So, Obama wants to take some light crude out of the strategic petro reserve and eventually replace it with heavy crude. His claim seems to be that it would immediatly relieve some of the pain at the pump. I see a few issues with this:

1. See this thread: http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=3242029;page=unread#unread
Taking oil from the strategic reserve to inject into the market to temporarily lower prices seems to be generally regarded as a bad idea by most thinking people. Where is the condemmnation from republicans (and even democrats) on this idea? It is pretty clear that this is a temporary stunt that will momentarily depress prices but lead to much higher prices in the long term.

2. Increased supply would, in theory, lead to increased demand. Americans have, in general, been driving less this summer due to high gas prices. If those prices go much further down, we would just start driving more again, driving demand right back up again and negating the increase in supply. Prices will rise again, and the strategic reserve will have less light crude in it to boot. Great. I have not done the math on this but I don't think its entirely necessary to assess the situation.

3. Wouldn't having heavy crude in the petro reserve be substantially less useful than light crude? From what I have read, we can't easily make gas out of it, and that is where the vast majority of people's energy woes lie. In Obama's energy plan (PDF on his site) he states that heavier crude is "more suited to our long term needs". I have seen nothing to indicate this would be true, and he offers nothing to back up this statement.

My thoughts: this is a really bad idea! Obama is catering to the non-thinking middle class sheep who automatically hear "more oil on the market" and equate that with "cheaper gas" without thinking of the real consequences of such an action.

Vote and discuss, and post what you think would happen if this idea comes to pass.

[Gawain 0]

Aside from his incorrect assessments on either side of his flip flop...

Releasing oil from the strategic reserve was not intended as a price control. Therefore, speculators would not budge an inch in their price contracts. Additionally, if I were a speculator, I would contract for higher commodity prices because now, the US will have to replenish whatever amounts are removed from the reserve.

It's product that has been removed from the market, so the market has not priced for that as supply. Since it was already bought off the market, providing it will not affect speculation on oil supply and production as a result of a release from the reserve (idea meaning lower prices).

If actual production is increased (meaning the US finally drills for new sources), then speculators and the market will see stabilized increase in supply, future contract sales would begin to go down in price.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[VTmotoMike08 0]

Quote

Aside from his incorrect assessments on either side of his flip flop...

I'm not sure if you are talking about me or Obama? Sorry, can you explain?

Quote

Releasing oil from the strategic reserve was not intended as a price control.

Yes, it is exactly that according to this pdf on his site: http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf
It says: "With the goal of bringing down prices at the pump, he supports releasing light oil from the SPR now..."

Quote

Therefore, speculators would not budge an inch in their price contracts. Additionally, if I were a speculator, I would contract for higher commodity prices because now, the US will have to replenish whatever amounts are removed from the reserve.

Don't speculators react to projected supply and demand? If new supply is introduced into the market, then we will have to buy less in the immediate future as our refineries are being temporarily filled with light oil from the SPR. And he mentioned no time frame for refilling it, so who knows when that would be. Regardless, I think it is pretty well established that releasing oil from the SPR would, indeed, bring down prices in the short term.

Quote

It's product that has been removed from the market, so the market has not priced for that as supply. Since it was already bought off the market, providing it will not affect speculation on oil supply and production as a result of a release from the reserve (idea meaning lower prices).

Not sure that I follow this part. Yes, it was bought off the market, but its being sold back onto it so...??

Quote

If actual production is increased (meaning the US finally drills for new sources), then speculators and the market will see stabilized increase in supply, future contract sales would begin to go down in price.

Agreed. Increased production now defanitly has a place as part of a total energy plan.

[billvon 2,476]

>If actual production is increased (meaning the US finally drills for new
>sources), then speculators and the market will see stabilized increase in >supply, future contract sales would begin to go down in price.

1) The US is drilling for new sources all the time. Indeed, the best place to put pressure there is on oil companies who aren't using their current resources.

2) Opening currently off-limits areas will have a negligible effect on oil prices, per the US DOE. Investors aren't stupid, and will generally listen to the DOE over pundits.

[VTmotoMike08 0]

I'm curious to know how you voted. Mind sharing?
I know you're pretty pro-bama (and I am starting to be more so myself) but anti- tapping the SPR.

[jcd11235 0]

I don't think it's a good idea. Of course neither is opening up new areas for drilling. The energy problem needs to be addressed primarily on the demand side, not the supply side.

It's a shame that he was ridiculed for his much better suggestion of keeping tires inflated and engines tuned up.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[VTmotoMike08 0]

Now I'm kinda wishing that I had not put those last two choices in the poll so that we could see how people really felt.

[billvon 2,476]

I think it's a bad idea overall, unless the amount withdrawn is made up immediately (which sorta negates the point.) It's almost always a bad idea to use a strategic reserve to temporarily lower prices, whether it's in a salt cavern or a preserve somewhere.

[Dumpster 0]

Quote

So, Obama wants to take some light crude out of the strategic petro reserve and eventually replace it with heavy crude. His claim seems to be that it would immediatly relieve some of the pain at the pump. I see a few issues with this:

This is going to make some stupid people think "What a great idea!!" and vote for him, thus he wins the election. When they realize no decrease in pump prices, it will be blamed on something such as an alleged terrorist farting upwind of a US destroyer anchored off the coast of New Jersey or some shit.

Easy Does It

[idrankwhat 0]

Quote

This is going to make some stupid people think "What a great idea!!" and vote for him, thus he wins the election. When they realize no decrease in pump prices, it will be blamed on something such as an alleged terrorist farting upwind of a US destroyer anchored off the coast of New Jersey or some shit.

You could apply the above to almost every proposal that comes out of Washington that doesn't put alternative energy development and conservation as the first priorities.

[Dumpster 0]

No shit - You can apply that to all the proposals that do put alternative energy and convervation up front. too.

During the election season it's all about getting the vote, and the less educated the masses are, the better.

Make something sound sensational, put it in a 30-second media bite, (if the attention span is that long, hell, 15 seconds will work.....) pay a few good-looking talking heads to nod in agreement, and then you've got half the country nodding in agreement.

Easy Does It

[Gawain 0]

Quote

It's a shame that he was ridiculed for his much better suggestion of keeping tires inflated and engines tuned up.

Yeah, because modern engines need tune-ups.

And, by the way, inflating tires would not save the amount of consumption he cited. Over inflating them wears them out faster. Do you know what the primary ingredient in making tires is?

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[billvon 2,476]

>Yeah, because modern engines need tune-ups.

They do indeed. Changing spark plugs and air filters can have an influence on your fuel economy, although not as much as proper inflation of tires.

>And, by the way, inflating tires would not save the amount of
>consumption he cited. Over inflating them wears them out faster.

Correct. But underinflation wears them out even faster than overinflation. Getting them all to the recommended inflation levels is the goal. It should also be noted that it's best to do this yourself; many dealers underinflate tires to give a smoother ride.

A few tidbits:
==========
NHTSA study: "In 1999, underinflated tires contributed to 247, or 0.8 percent, of 32,061 fatalities and 23,100, or 0.8 percent, of almost 3 million injuries. In addition, NHTSA estimates that 41 vehicular-related deaths occur annually because of blowouts alone from underinflated tires."
==========
In a cross-country survey, the study found that 70 per cent of vehicles randomly tested had at least one tire with an inflation problem. . . . And 23 per cent of vehicles had at least one tire under-inflated by more than 20 per cent. That kind of under-inflation results in using about two weeks' worth of extra gas per year and reducing the tire's life by nine months, all the while pumping out unnecessary carbon dioxide.
==============
(Re: the Firestone recall) - The recall covers Firestone tires used on Ford trucks and sport-utility vehicles, especially the Explorer, which have been linked to more than 100 deaths in the U.S. and Venezuela. Ford is under fire for having recommended that the tires be underinflated, which critics have called an attempt to lower the risk of rollovers in SUVs.
==============

[Gawain 0]

Quote

Quote

Aside from his incorrect assessments on either side of his flip flop...

I'm not sure if you are talking about me or Obama? Sorry, can you explain?

I'm talking about Sen. Obama.

Quote

Quote

Releasing oil from the strategic reserve was not intended as a price control.

Yes, it is exactly that according to this pdf on his site: http://www.barackobama.com/pdf/factsheet_energy_speech_080308.pdf
It says: "With the goal of bringing down prices at the pump, he supports releasing light oil from the SPR now..."

That's what Sen. Obama says, but that is not what the Strategic Petroleum Reserve was designed for.

Quote

Quote

Therefore, speculators would not budge an inch in their price contracts. Additionally, if I were a speculator, I would contract for higher commodity prices because now, the US will have to replenish whatever amounts are removed from the reserve.

Don't speculators react to projected supply and demand?

Yes, but this oil in the SPR has already been taken out of the market at the contract price at the time. It is not part of the commodity market now. If they release it from the SPR, how much will it cost the refiners? They aren't going to give it away for free. So, even at today's price, it does nothing for the cost of fuel to the consumer, because the refineries will still have to buy it.

Quote

If new supply is introduced into the market,

The oil in the SPR has already been bought off the market. See previous comment.

Quote

Regardless, I think it is pretty well established that releasing oil from the SPR would, indeed, bring down prices in the short term.

No it wouldn't. Even if the refineries buy it at today's contract price of $113/bbl.

Quote

Not sure that I follow this part. Yes, it was bought off the market, but its being sold back onto it so...??

But the intent is to sell US oil to US based refineries. It's not on the global market.

Quote

Agreed. Increased production now defanitly has a place as part of a total energy plan.

I concur. Oil does more than simply power our vehicles. Sen. Obama's goal to be off oil in ten years doesn't even qualify as a pipe dream. It qualifies as naivete.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[Gawain 0]

Quote

>Yeah, because modern engines need tune-ups.

They do indeed.

I am not aware of any "common" vehicle whose manufacturer recommends a true tune up before 100,000 miles. Standard maintenance is ubiquitous and is required for vehicles to maintain emissions inspection standards in many states, so the Sen. Obama idea is already being done...no real net savings on the scale he states.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[billvon 2,476]

>I am not aware of any "common" vehicle whose manufacturer recommends a true tune up . . . .

A "true tune up?"

I won't get into that; dictionary games aren't much fun, and generally indicate that the rational argument is coming to an end.

>Standard maintenance is ubiquitous and is required for vehicles to
>maintain emissions inspection standards in many states . . .

Uh, no, it's not. You can never replace your air filter and still pass emissions.

[jcd11235 0]

Quote

Yeah, because modern engines need tune-ups.

You might be surprised how many people ignore check engine lights. As Bill pointed out, new engines are not maintenance free. Failure to perform that maintenance can decrease mileage.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[mnealtx 0]

Quote

Quote

Yeah, because modern engines need tune-ups.

You might be surprised how many people ignore check engine lights. As Bill pointed out, new engines are not maintenance free. Failure to perform that maintenance can decrease mileage.

Agreed - but the old days of tweaking the timing/points/mixture back into balance once a month are long past. "Tuneups" nowadays is changing the oil every 3-6 months (depending on mileage) and the air filter once a year.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[n23x 0]

Quote

Agreed - but the old days of tweaking the timing/points/mixture back into balance once a month are long past.

Nobody said anything about revving the firebird in the garage while blasting freebird and drinking a couple a' (30) beers.

Quote

"Tuneups" nowadays is changing the oil every 3-6 months (depending on mileage) and the air filter once a year.

Do you think these things affect your mileage? So... Is Obama right, or is he right?

.jim

"Don't touch my fucking Easter eggs, I'll be back monday." ~JTFC

[mnealtx 0]

Quote

Quote

Agreed - but the old days of tweaking the timing/points/mixture back into balance once a month are long past.

Nobody said anything about revving the firebird in the garage while blasting freebird and drinking a couple a' (30) beers.

You're right, nobody did...so what's your point BESIDES thinking you're so witty by equating anyone that doesn't think the same as you as an ignorant redneck?

Quote

Quote

"Tuneups" nowadays is changing the oil every 3-6 months (depending on mileage) and the air filter once a year.

Do you think these things affect your mileage? So... Is Obama right, or is he right?

.jim

The point was that "tuneups" aren't as necessary/frequent as in times past , so the tuneup remark by Obama is a bit of a red herrng.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[Gawain 0]

Quote

Quote

Yeah, because modern engines need tune-ups.

You might be surprised how many people ignore check engine lights. As Bill pointed out, new engines are not maintenance free. Failure to perform that maintenance can decrease mileage.

We've had this discussion, you know as well as I that the check engine light is not solely indicative of a maintenance issue. In fact, a check engine light is typically not designed to go on in order to remind someone to change their oil.

The era of a "tune up" every 30,000 miles is long past.

That's not to say that regular maintenance (such as air filter change/clean) shouldn't be done. However, it's hardly a tune-up. Depends on the environment and the equipment. Spark plugs are solely dependent on the type of plug, vehicle. Some plugs are designed to perform over 100,000 miles due to engine type.

Oil changes are a variable too. A high-revving Civic Si benefits more from an oil change over shorter intervals versus a BMW 3-series (which is only every 10K).

The day of changing the wire harness for spark plugs is no longer part of the regular deal, and timing is now checked with the change of a timing belt or chain.

The bottom line is this: maintenance is good. Sen. Obama's Garage tips do nothing to address the issue of the costs of energy in this country, and we already know that he is perfectly comfortable with the squeeze on the average American.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[jcd11235 0]

Quote

The bottom line is this: maintenance is good. Sen. Obama's Garage tips do nothing to address the issue of the costs of energy in this country, and we already know that he is perfectly comfortable with the squeeze on the average American.

I realize new cars don't need plugs, points, and condenser every 15K miles. I also realize that Obama is not going to put Tom and Ray out of business anytime soon. However, he's right on the money with his claims that properly inflated tires and a well tuned engine (i.e. maintenance properly done in timely manner) will increase gas mileage right now.

On the other hand, opening up ANWR, for example, will do very little, if anything to help our current energy problems.

This is an issue that has to be tackled primarily from the demand side. Negligible increases in supply, such as from the strategic reserve or ANWR are drops in the bucket that offer little real benefit.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[billvon 2,476]

>Sen. Obama's Garage tips do nothing to address the issue of the
>costs of energy in this country . . .

Pretty much every expert in the US disagrees with you. Even McCain has admitted it's a good idea. Which is fine; that's the purpose of boards like this one.

[Gawain 0]

Quote

This is an issue that has to be tackled primarily from the demand side. Negligible increases in supply, such as from the strategic reserve or ANWR are drops in the bucket that offer little real benefit.

We partially agree, in terms of demand, it was reported today that so far this year, consumption has gone down an average of 800,000bbls/day in the US.

That, along with the stronger dollar is why the commodities market has seen the price of oil go down.
http://news.yahoo.com/s/ap/20080812/ap_on_bi_ge/oil_prices;_ylt=AskAhXSKs1ivDhCtTaoVCFSs0NUE

Hopefully, we're learning a lesson on the demand side for the long term (though I fear we won't), and the supply side must now be stabilized, and that means diversifying production away from the middle east, and corrupt states of south America.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[jcd11235 0]

Hopefully, we're learning a lesson on the demand side for the long term (though I fear we won't), and the supply side must now be stabilized, and that means diversifying energy production away from the middle east, and corrupt states of south America fossil fuel sources and investing heavily in alternative, renewable energy sources such as solar, wind, and geothermal.

IMO

Math tutoring available. Only $6! per hour! First lesson: Factorials!