How much is the Oil coming from the Strategic Reserve going to cost us, again?
By: Dr. Phil Taverna
Obama released 30 million barrels of oil from the U.S. Strategic Petroleum Reserves (SPR). This could be problematic at many different levels. To start with why was this discussed behind closed doors and not allowed to be in a public forum. The obvious answer is like Obamacare, it would be too much for the people to handle. But it appears that this decision was made a long time ago. Leno was quick to point out that it was an election year so that is why the oil was released.
So what is the SPR. President Bush was instrumental in increasing the oil supply and he actually filled it to its capacity. They claim the SPR for the U.S. was about 727 million barrels of crude oil before the release. Wouldnâ€™t you like to see the dip stick they use to measure all that oil?
Once President Bush spent the money to fill our SPR and it was completed, the price of gasoline at the pump began to go down. If we begin to look at this great global economy that the liberals are so enamored with, we must begin to question the effects on the price of oil caused by the global SPRâ€™S.
It is difficult to imagine what a million barrels of oil really is. If we can make this real simple, letâ€™s say the crude is refined with no waste and a barrel of oil produces a barrel of gasoline. The average car has a 20 gallon tank. And there are about 50 gallons of gasoline in a barrel. So in real crude numbers, each barrel would fill 2.5 cars. Thus a million barrels would fill about 2.5 million cars. So a release of 30 million barrels would fill only once about 75 million cars. Now thatâ€™s real crude math for real crude oil. But it is important to get a handle on what kind of effect this may have for our economy.
In realty the U.S, government is selling its oil to the oil companies at current prices but President Bush bought the oil at a much lower price. Not a bad deal. The Democrats will use this exchange as revenue in the budget. In the end it will look like the United States made money. And the Democrats will need to make fewer cuts in their spending to balance the budget. It is like cutting troops in Afghanistan. It looks good, but does it really help anything and is Obama actually shooting himself in the foot. As it stands now his approval rating is so low, he couldnâ€™t get elected dog catcher. But the election is over a year away. By then nobody will remember that unarmed Osama was executed by Obama. And the effect of the lower gasoline prices will be gone.
If the Democrats are prudent, they will start to buy up the oil at higher prices then what President Bush paid for the oil. Hopefully it will be lower then what we sold it for. So in the end the savings pretty much is a wash. But what happens to the oil prices as Obama tries to replenish the SPR? They will go up. But if the Democrats were smart, they would not have sold the oil to the oil companies. They would have exchanged the oil for future oil in kind. This is good for the government because they are getting oil for FREE. And this will not affect the price of oil theoretically as Obama buys 30 millions gallons to replace the crude he just released. It might affect supply and demand, but that seems to be a joke at this point. After all the global oil SPRâ€™s of the world decided to release a total of 60 million barrels because of the effect of loss Libyan oil. The U.S. doesnâ€™t buy Libyan oil but whose counting.
So in the end the Democrats will use this as budget revenue and conveniently not show the added expense on the ledger sheets of replacing the oil.
Replacing the oil is really the problem. That does affect the supply and demand. The liberal Democrats may try postponing the replacement of the released oil until after the 2012 election. There is already talk of another release. Also note that the price of gasoline was already coming down before the release.
Keep in mind that the original intent of the SPR and it enormous expense was to protect this country if for some catastrophic reason there was not enough oil in the United States. It was not meant for political purposes and as a spigot to be used to adjust the price of gasoline just before an election.
Remember when the Liberals told us the reason the price of gasoline is so high was because of supply and demand. We were told that countries like China were progressing in their industrial revolution and they were using more oil. But did you know that China as well as other countries have their own SPRâ€™s.
For example China has been expanding its SPR since 2007. They added about 101 million barrels in 2008. By the end of 2020 their plans will take about 684 million barrels of crude out of the global economy and sock it away for a rainy day.
In effect you the consumer are competing in the market place with all these governments sucking the oil out of the system. So if you look at the trend to suck oil out of the system, you will see a trend to drive up the price of oil and gasoline in an artificial manner. It is quite counter productive because oil is being produced and instead of being pumped into the world to be used by consumers at a reasonable price to help drive economies, it sits in some tank some where doing absolutely nothing except costing money to maintain at the same time screwing up the oil economies of the world.
The real problem lies in the fact that the liberals donâ€™t like oil. They want you to use inefficient green energy which must be hiding away in Obamaâ€™s corner with the make believe shovel ready jobs.
In the end it appears that it is not OPEC that is the problem, it is not the inefficient engines that are the problem. Itâ€™s not the greedy people who want to drive those large cars. The gut check should be if oil is so bad, why are all these countries stock piling all this oil?
For the price of 30 million barrels of oil, just think how many nuclear plants and wind mills you could build? Actually $3 billion dollars would not buy a whole lot of green energy. It is conceivable that one nuclear plant would carry a price tag of well over $1 billion dollars.
So at the end of the day after all the green rhetoric, the only way to go is gasoline. Someday cars may run on water or air, but for now and the conceivable future we do need oil!
It might be wise to increase the production of global crude in such a magnitude so that the filling of all these global SPRâ€™s has little or no effect on the price of gas in your country. If the liberals are so quick to empty the oil in the SPRâ€™s then why are they so slow to harvest more oil from our lands?
Remember Clinton was prone to empty the SPR. It was rumored that Jesse Jackson made money on the deal. Wouldnâ€™t you want to know which member of Obamaâ€™s team will be making money when all the oil is released from the American SPR.? And you might want to know how much of that money will end up in Democrat campaign coffers for the upcoming election!
Dr. Phil Taverna owns and operates his own website.