Oil Reserves to be opened

[jgmklmhem]

Oil Reserves to be opened

 

[Free4Life11]

Are we going to use it all up? How does this affect consumers? Does this help people in the destruction of the hurricane? Or does it help people driving their gas guzzlers in California or wherever? Are the refineries owned by the billiion dollar oil companies who have billions in cash and profit? Do they really need this after we just passed the energy bill that benefits them?

The article gave me more questions than answers!

Don't mistake my questions for being AGAINST this, I just don't understand the implications.

ETA:

He said his department was dealing with inquiries from three companies about getting oil from the reserve. On Monday, Citgo Petroleum Corp. asked for 250,000 to 500,000 barrels to ensure that its Lake Charles, La., refinery doesn’t run out.

Does the government SELL this oil to Citgo? Or do they just...give it to them?!?

 

[jgmklmhem]

The biggest implication is that for the most part the rest of the country will not see a huge shortage of fuel like another thread predicted. From what I have read oil is pretty much processed immediately and moved on to the consumers. There normally isn't any real lag time involved. So this will just replace the oil that can't come in to be processed so that we don't have gas lines etc.

 

[JimB.]

It is a short-term measure to insure the flow of oil to refineries.

It was also done last year when Ivan struck the gulf coast. The key to the whole event is whether the REFINING capabilities are reasonably intact.

Oil does no good if you cannot turn it into gasoline, heating oil, diesel, etc.

I heard someone suggest (& it sounds like a good idea to me.....) that the government needs to consider a strategic GASOLINE reserve also. That way, if refining capacity was heavily disrupted, there would still be gasoline for use.

On Monday, Citgo Petroleum Corp. asked for 250,000 to 500,000 barrels to ensure that its Lake Charles, La., refinery doesn’t run out.

IMHO, this is GOOD. It indicates that the refinery can still process fuel.

 

[lyeag]

Exactly, the opening of the reserves will help protect the economy by not causing a domino effect on the price of consumer goods and causing inflation to rise.

 

[sodaseller]

Cute "out of the mouths of babes" statement this am from my DD9 hearing this on NPR as we drove to school. She had been hearing about the unsanitary water all over NO and could not understand why the President was "releasing" more oil out into that. I explained

 

[Free4Life11]

Thanks for the updates. So essentially this is done to prevent a shortage. In that case it sounds like a good idea.

 

[lyeag]

Cute "out of the mouths of babes" statement this am from my DD9 hearing this on NPR as we drove to school. She had been hearing about the unsanitary water all over NO and could not understand why the President was "releasing" more oil out into that. I explained

That is cute!

 

[JimB.]

P.S. - The oil from the SPR is sold via competitive bid, not given away.

 

[rcyannacci]

Cute "out of the mouths of babes" statement this am from my DD9 hearing this on NPR as we drove to school. She had been hearing about the unsanitary water all over NO and could not understand why the President was "releasing" more oil out into that. I explained

Cute...but also smart (if inaccurate ). At 9, it's great she's really trying to process all of this information.

 

[sodaseller]

Cute...but also smart (if inaccurate ). At 9, it's great she's really trying to process all of this information.

Thanks.

 

[OhMari]

What is the reserve for if it is not meant for something like this.

 

[Free4Life11]

What is the reserve for if it is not meant for something like this.

You're right. I was a little leery at first because I didn't really understand this, but it does seem like a good idea.

 

[Cindy's Mom]

I have nothing to back up this up, but I have a bad feeling about this. I don't know why, but I do.

 

[wvrevy]

From what I understand, it's the loss in refining capabilities more that the loss of inflow of petroleum that is really threatening to make an impact. The local refinery here (in Kentucky, actually) says it is already operating at 100% capacity...so why did my gas prices just go up over 50 cents in 24 hours ?

Seems to me that this is sort of a typical response from the administration...inept and unrealizing of the actual scope of the problem. But that is solely based on what I've heard about the refining problems. If that isn't true, then this may actually help.

 

[Galahad]

From what I understand, it's the loss in refining capabilities more that the loss of inflow of petroleum that is really threatening to make an impact. The local refinery here (in Kentucky, actually) says it is already operating at 100% capacity...so why did my gas prices just go up over 50 cents in 24 hours ?

Seems to me that this is sort of a typical response from the administration...inept and unrealizing of the actual scope of the problem. But that is solely based on what I've heard about the refining problems. If that isn't true, then this may actually help.

Read a report this morning that confirms that 1) several refineries do not have their supplies of oil and the supply chain for many parts of the country is threatened by that. And 2) some parts of the country are serviced by refineries that primarily don't get their oil through the gulf (much of the Midwest is in that boat). And 3) there are a few refineries in the Midwest (Indiana and Kentucky) that get their oil from pipelines from the gulf area and they are seeing a potential 25% reduction in the amount of oil they will get through the pipelines without intervention. I don't think the administration lacks an understanding of the problem.

 

[Mickey's Monkey]

Read a report this morning that confirms that 1) several refineries do not have their supplies of oil and the supply chain for many parts of the country is threatened by that. And 2) some parts of the country are serviced by refineries that primarily don't get their oil through the gulf (much of the Midwest is in that boat). And 3) there are a few refineries in the Midwest (Indiana and Kentucky) that get their oil from pipelines from the gulf area and they are seeing a potential 25% reduction in the amount of oil they will get through the pipelines without intervention. I don't think the administration lacks an understanding of the problem.

But this will likely have little to no effect on prices. Most of the refineries are at 95% capacity, or will be back to that if the oil reserves fill the gap. So, this will likely mitigate the risk of shortages more than have an impact on prices. One of the big problems we have it not enough refineries to produce gas from oil. And let see how supportive the environmentalist will be in building more refineries.

 

[sodaseller]

Think the release is intended to calm the spot and futures markets, and it appears to have worked. Some spike, but nearly what I would have anticipated. Of course, I would not be surprised to still see that spike, and there is nothing any policymaker can do in the short term to stop that. I was pleased to see on Drudge that the President is expected to ask Americans to conserve - too long in coming, IMO

 

[Mickey's Monkey]

Think the release is intended to calm the spot and futures markets, and it appears to have worked. Some spike, but nearly what I would have anticipated. Of course, I would not be surprised to still see that spike, and there is nothing any policymaker can do in the short term to stop that. I was pleased to see on Drudge that the President is expected to ask Americans to conserve - too long in coming, IMO

Don't tell me people are going to listen to the President, are they?

 

[wvrevy]

Don't tell me people are going to listen to the President, are they?

That depends on what sort of strategery he lays out.

When someone talks sense, yeah, I think you should listen to them. Particualrly when it doesn't happen all that often.

Thanks for the info, Galahad...As I said, I'm not completely up on the situation. I just know what I read and hear, and I had heard that the problem was more on the refining end rather than the supply of crude.