In the Path of Gustav the Huffington Post Moves the Price of Oil

Really?! Well maybe. Consider the following. Early yesterday I posted on this site, "Hurricane Gustav and Our Strategic Petroleum Reserve," querying why the Department of Energy had not announced its willingness to release crude oil from the Strategic Petroleum Reserve in case Hurricane Gustav created a dislocation of oil supplies. The price of crude had been climbing by more than $5.00 a barrel over the past week with hurricane Gustav in our sights. After all, we have over 700 million barrels in storage bought and paid for by all of us. If not available to counter the impact of a Gustav, when and how and for what reason?

The post also signaled its contention that our oil cronied administration and its Department of Energy would not lift a finger to initiate any action that would constrain the price of oil from moving ever higher because of fears related to Gustav. That post was published at 8:50 yesterday morning. Of course, continuing its policies, the Department of Energy did nothing and would in all likelihood have continued to do nothing even had they read the post. While the Department of Energy continued to snooze its international counterpart, the International Energy Agency operating out of Paris and representing 27 countries from Europe to Australia, holding emergency stocks equivalent to 90 days imports of its member countries, took action. According to a Bloomberg report time dated yesterday at 12:34 PM Eastern Standard Time the IEA issued a statement that it would tap strategic stockpiles, if needed, because of Tropical Storm Gustav. Almost immediately the price of oil on the New York Mercantile Exchange dropped by $2.75 a barrel or 2.3 percent.

Later that afternoon, our Department of Energy was shamed into action. The IEA had shown that it was determined to use its resources to maintain some semblance of reasonable balance in oil markets. The Department of Energy and White House relented and finally issued a statement: "DOE is closely monitoring the situation and stands ready to use every available tool to ensure continuous and reliable supplies of energy in the event of a disruption." Why they could not have been first in line can only be subject to endless speculation.

So there we have it. Cause and effect? You decide. Consider the time frame. Gustav has been in the news for near a week. No word from either the Department of Energy nor the IEA on policy regarding disposition of petroleum reserves in the face of Gustav. My guess -- without the nudge from the Huffington Post, which may or may not have elicited the subsequent decisive action taken by the IEA, the Department of Energy would still be instructing us that Hurricane Gustav is no reason to make our oil from our Strategic Petroleum Reserve available to steady the turbulent distortions being caused in the market because of the advent of Gustav. That the administration needed to be shamed into action by the Paris based IEA speaks volumes, and sadly, it's all ugly.

Comments

[ADunafraid]

You are very naive if you believe that the SPR will be used on a large scale to control price shocks. It is there so the government and army can maintain order if there is a major supply shock that creates social unrest.

[tommy slothrop]

"After all, we have over 700 million barrels in storage bought and paid for by all of us. If not available to counter the impact of a Gustav, when and how and for what reason? "

How about waiting to use it when there was a real emergency - such as if it was needed to harvest, process or transport food or provide other essentials. Putting it on the open market so that people can drive around in one-occupant vehicles seems frivolous.

[LiberalBuzz]

Can't say the true cause and effect, but what the heck, if Bush can take credit for no more attacks within the U.S. by invading Iraq, then what the heck, Huffpost can take the credit as well.

[schatsie]

Heck if Bush could say Mission Accomplished 7 years ago, then surely you can take credit for this...

[cylindar]

The petroleum reserves do not have to be opened until it is certain that they will be needed. If there really is a need they will be there for us. Very simple. You can't run for the cookie jar every time someone screams fire. Besides that, petroleum reserves need to be carefully handled. For instance, what would happen if we used a large portion of the reserves and then Iran decides to block Hormuz. Then what? We need to be very careful how we handle our reserves and a temporary price spike just because of a hurricane is not going to hurt us much in comparison with a situation wherein we squandered our reserves and at the moment we really need them, they are not there.

[23000Days]

If I might point this out... Iran would only close the straits of Hormuz in the event of an attack by ourselves or israel. All we have to do is DON'T DO THAT!
Secondly, one of the functions of the strategic petrol reserve is to act like a pressure bubbe in the supply line to ensure steady supply. It was never meant to be the political tool it's being used for, by this administration. (I.E.: Buying heavily to drive up the price of oil, at the same time paying premium prices to their cronies, and therefore, themselves.)

[Aaror]

So sayath the Oil Industry, so sayith the flock!

[PhantomAviator]

..

But THE POINT is to keep oil prices right at the PAIN THRESHOLD. That point below public anger and above true costs.

Do a story on how the oil companies refuse to drill in the offshore leases they currently own. Maybe that will stop the "drill now" fake-debate.

.

[Paul]

The problem with drilling offshore isn't that it will make no difference to US oil supplies (it won't). The problem with offshore drilling is that it is a mis-allocation of capital. We don't need to pump more oil, we need to use less.

The money spent developing expensive arctic and offshore fields would be better spent on mass transit.

Why should Exxon get to decide where our energy money goes?

[Paul]

It's just possible that George Bush will be credited for doing more to reduce our dependence on foreign oil than any other President in the last 50 years.

By increasing the price of gasoline Bush has broken the cycle of wasteful consumption through ever bigger and less efficient automobiles. This is something Congress, Gord and GM could not do.

We need to pay more for gasoline in the US, not less. All the minor fluctuations of the market - even if driven by speculation - is beside the point.

The only question is how to make this happen.

Bush favors letting free-market Exxon make all the money. But there is a better way: tax imported oil to the pain threshold and use the revenue for mass transit.

[23000Days]

Yup!

[NorCalNative]

Mr. Learsy, this is quite a remarkable statement. I simply don't see enough historical data in your article to make that leap. Can you give us the context that makes you question the DOE's timing or current statements? That these events unfolded as you describe isn't problematic. Can you link to any other group or individual who feels something "unusual" took place?

Is this the first time IEA has acted in this manner? How much influence does the IEA have on the DOE historically? How much influence does the DOE have on the IEA?

[GetAbike]

OK, I get it. HAhahahahahahahahah.
You think the White house reads Huffpo.
Here's how that conversation might have gone:
Bolten: "Sir, as I was reading the Huffington Post I saw that a blogger has derided our lack of action regarding the SPR and hurricane Gustov ."
GWB: What'd they say?
Bolten: "Don't count on this administration to do anything to contain the price of oil and thereby bring consternation to their cronies in the oil patch".
GWB: "WHAT? they said that? I've never heard that before. I think we should prove him wrong. Get the cabinet together. We need to nip this viscous rumor in the bud."
Or something like that.

[KillTheMessenger]

Wow... probably a couple thousand bored people read the article. In all likelihood none of them works for any of the places which have any influence on these events.

And Mr. Learsy believes he moved the world?

Someone give me the definition for "chutzpah"! Quick!

[Rule Of Law]

That is a Klingon word...?

[23000Days]

Ferenge!

[jsarets]

More like self-aggrandizement.

[outfitterjoe]

A while back I discovered, in Wikepedia, something that no one talks about. Did you know that we have tapped the SPR 10 times to loan the oil companies oil? Eight of those times by Bush. No one I've talked to knows about this. Supposedly, it gets paid back with interest. Perhaps, Mr. Learsy, you could explain what is going on here. If we need it and it ain't there, it ain't there; regardless of the reason. When Barrack Obama suggested tapping into the SPR he got all this flak saying it was for national emergencies only.

[KillTheMessenger]

You can find out about it on the government's own SPR pages like

http://www.spr.doe.gov/

http://www.fe.doe.gov/programs/reserves/spr/spr-drawdown.html

It's one of those big secrets that they don't want you to know about. That's why they put it up on a DOE web sites that nobody ever goes to because they are so incredibly lame.

:-)

[itolduso]

And yet, Gustav has failed to dim the chorus of calls for MORE oil rigs in the Gulf of Mexico. Why is no one calling the Repugs out for justifying huge price spikes in the price of oil everytime we have a storm in the Gulf of Mexico, yet they are claiming that more drilling in the Gulf will help bring down prices? There's something wrong with this picture!

[Vyvjala]

Corporate mafia's spincycle, they name the category and we pay it......................

[bdaved]

Saddam Hussein was eliminated as president of Iraq because he insisted on exercising too much influence on the day-to-day price of oil. The United States government prefers to leave that to the professionals.

[mjt218]

I guess it's good he doesn't take himself seriously?

[HeevenSteven]

Post Hoc, Ergo Propter Hoc.

[Rule Of Law]

Say whaaat? My Klingon dictionary is busted--can I git this in American?

[KillTheMessenger]

It basically means that somebody failed to learn logical thinking in school.

The proper Klingon reaction to this article would probably be

"Hab SoSlI' Quch!"

:-)