Streams

Tapping the Strategic Reserves

Friday, June 24, 2011

To tap or not to tap? NPR's Planet Money correspondent Jacob Goldstein discusses President Obama's decision to release 30 million barrels of oil from the Strategic Petroleum Reserves and what goes into the decision-making process.

Guests:

Jacob Goldstein

Comments [10]

Tony

Gas is expensive, but there is no national emergency.

Obama is putting his re-election to prop up his poll ratings.

Jun. 30 2011 10:21 AM
David Behrman from Houston

First, a pet peeve:

When discussing energy in the news, it is common for people to use the word "gas" when referring to gasoline.

However, natural gas is also an important element of our energy mix, and I think it would both be more correct -- and a reminder to most Americans who take their energy sources for granted -- and more educational if you would always maintain the distinction by referring to gasoline with its full name and referring to natural gas when discussing that form of energy.

Jun. 24 2011 05:44 PM
superf88

jgarbuz -- conservation would have been a great idea in the past but still applies, in the form of usage and transport efficiencies and reduced consumption. In addition, and what i was thinking of, is simply having the Fed or the oil reserve's current steward, Dept of Energy, create a "checking account" with oil purchased on today's commodities market as a short/medium term strategy of countering tomorrow's pricing swings. What Obama is doing is controversial only because he is dipping into the savings rather than the checking. If we use 20 million gallons of oil a day, and there are 730 million barrels in the reserve -- the idea is to create a checking account of 1 billion barrels and savings account of 4 billion barrels. That would even out the market for several years financially and strategically carry us into the next fuel source. In total agreement with you there ought be strings attached -- namely, a focus on renewable energies -- especially ones that aren't strategic commodities in their own right! (biofuel -- otherwise known as our food!). Of course, rather than my above scheme I'd prefer to see all US government participation eliminated, with oil companies paying real estate market values for their leases, paying full taxes on profits (eliminating the need for "windfall" taxes) and dismantling all areas of government surrounding the oil industry aside from environmental/worker regulation and tax enforcement. No special relationships in government, no special wars and no favors. Favors would be reserved for those firms truly advancing "Beyond Petroleum." Watch Germany 2020.

Jun. 24 2011 12:37 PM

To Superf88

We SHOULD have done that back in the '50s and '60s, when we produced all the oil in the world right here, but we chose to burn it up with V-8 engines and cars getting 8 miles to the gallon. But we burned up most of our easy oil long ago. WE can grow lots of corn from season to season, but oil is a finite product, and we cannot "grow" new oil. We can find some more, and burn it up as we tend to do, but that only kicks the can down the road a few more years. The only answer is RENEWABLES, as well as natural gas. Electric cars running on solar energy is the eventual long term answer.

Jun. 24 2011 11:25 AM
get well soon brian

Surprised you didn't ask him about an "oil checking account" to accompany our existing "oil savings account", which is random and in contrast to our other strategic commodities (and the savings vs. checking account metaphors).

Let's stretch our brains a bit

Jun. 24 2011 11:24 AM
Amy from Manhattan

To link this to the previous segment, is it really a good idea to encourage the continuation of the "summer driving season" when driving is 1 of the main sources of greenhouse gases?

Jun. 24 2011 11:22 AM
Josh from Washington Heights

This was a good move to hopefully shake off speculators that amplify increasing oil prices. The surprise timing is also explained by this theory. To catch the speculators off guard, the administration is hoping that many of the speculators lose their shirts now that they need to cover their bets. You can bet they'll be wary about jumping on the oil rising band wagon the next go round, which will hopefully stabalize oil prices in that they'll increase based on actual need vs. prices increasing simply through market manipulation.

Jun. 24 2011 11:21 AM

I have to agree with Martin on this one, however there are other considerations. Iran is committed to bringing down the West by trying to get OPEC to cut supplies and thus raise prices. Saudi Arabia is the one country that can foil Iran by raising supply as needed. But the US had to show that it had a certain degree of immunity by releasing some reserves now to bring down prices a tad, especially with the summer vacation time looming. So I agree it is partially to help Obama with the masses, but it was also to send a signal that we are not totally impotent in this regard.

Jun. 24 2011 11:16 AM
Superf88

Is there a reason we don't have a sor of several years worth of oil, to Temper prices generally? We do this with wheat and corn. It s not like we'd be violating free market dynamics-- given existing financial and diplomatic subsidies, free market principles don't apply. The only losers would be a few big rich companies that are currentlyakimg billions a day by glibly gaming the market.

Jun. 24 2011 11:14 AM
Martin Chuzzlewit from Manhattan

Of course, Axelrod made Obama jump on board this band-aid trick.
The name has meaning......"Strategic reserves"....as in national emergency.

It is NOT named the "Oil for Obama's 2012 campaign effort because his poll numbers are tanking again since he is a pathetic empty suit who is clueless and is screwing up the economy." (Though he might appoint a czar to get the name changed.....I wouldn't put it past him.)

They will respond "it's been done before"....but where is the real emergency now? Also, they are required by law to replace this oil.....no doubt this will wait until after the 2012 election.

Jun. 24 2011 09:25 AM

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