The price of oil for West Texas Intermediate Crude (WTI) now sits at over $100 a barrel. WTI is the benchmark for the price of oil traded on the New York Mercantile Exchange (NYMerc) and delivered in the United States with Cushing Oklahoma as the point of delivery. The other benchmark for oil pricing is Brent North Sea Oil traded in world exchanges especially London. Today the quoted price for WTI is $101/bbl while Brent is trading significantly higher at $114/bbl.
The difference reflects a difference in supply in the U.S. domestic market and that of the European and otherwise world markets. We have ample supply of oil in the United States with stocks both commercial and government (the Strategic Petroleum Reserve --'SPR') at or near all time highs.
Yet the events in Libya, more out of fear and distorted trading on the exchanges have pushed the price of oil to levels that are threatening the economic recovery worldwide even though our market is amply supplied. Yet, importantly, because of the current schism in the price of oil (WTI vs Brent) we are in a position to do something about it.
We have a Strategic Petroleum Reserve holding some 750 million barrels of oil -- available to the nation in case of national emergency. The looming economic crises caused by the massive jump in oil prices must certainly be classified a national emergency.
Given that our oil markets are well stocked, it is the traded price of oil that poses the grave economic danger. The government, by systematically releasing 200,000 to 300,000 barrels of oil a day from the STP until the events in Libya are resolved, could break the trading psychology that has overtaken the U.S. oil market and bring down the the price of WTI crude by some $20 to $30 a barrel. It might not impact the price of Brent crude directly but would certainly send a message to the International Energy Agency (IEA) to do likewise in that they control government stocks of 1.4 billion barrels.
Of course the oil industry and most likely the likes of the American Petroleum Institute will marshal their lobbying firepower to forestall such a dynamic initiative by the administration. Such attempts by the oil lobby would once again underline the divergence in priorities and responsibility between the oil interests and the nation's well being. Should that come to pass, perhaps this is the moment to strongly consider the 'Norway solution' and nationalize the oil industry altogether. Certainly in Norway the national patrimony of that nation's oil riches and its administration has benefited that nation making it the envy of much of the world. There is something wrong with our system whereby many Americans are freezing in the cold of winter permitting a given sector of the economy to cash in.
Paul Steele: Norway In Winter - All Wrapped Up (PHOTOS, VIDEO)
The world uses over 80 billion barrels per day of crude and inventories are adequate. In this case, release of 200,000 to 3000 barrels of day is pi ssing in the wind and hoping for an outcome that cannot happen. Dumb idea.
Its morally wrong and corrupt.
The strategic reserve is not a government toy to be used to enrich special people or groups.
Learsy is so far out in left field, he's actually out of the ball park.
Let the republicans work down from that one. They'll be glad to get a crumb, just like everyone else these days.
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prosperity in the 90s happened IN PART because oil prices STAYED STEADY for the decade- time to move to a NEW + STEADY energy pricing scheme and 90s prosperity will flourish again! So Solar / Solar Thermal/ Wind Energy! Now!
http://www.eia.doe.gov:80/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html
Canada #1 and Mexico #2. Did our neighbors move or what? Mexico has a drug cartel war going on and prices have not risen. Seems Americans get all twisted up when the middle east shakes its finger without realizing what's really taking place. Congress could stop this if only they didn't take bribes from big oil. First we subsidize big oil with $40 billion, then pay at the pump as well. Why do we keep falling for this scam instead of holding Congress accountable? They have the authority to implement price controls.
a/ its liquid fuels that are precious (hi energy to weight & runs zillions of legacy engines)
b/ there is no global shortage of natural gas despite what you read _ take away power gen and there is a glut
natural gas is a pretty good substitute for liquid fuels (oil) for heavy transport (trains, trucks, ships & even hi mileage cars)
we are squandering oil on non transport applications (power gen, heating) & transport that could use gas
we are squandering gas on non transport applications (power gen)
Un cool as it sounds, keep using coal but boost nuclear asap for baseload, encourage wind and googles initiatives in this area, forget solar panels (a pathetic daytime trickle charger that wouldnt survive any cost benefit analysis w/o subsidies (extend your bare arms on a sunny day - u can sense how little energy a solar panel is getting per sq")), solar hot water is good in lower latitudes.
My main point - start converting transport big liquid fuel users to cng asap, or there will be no substitute for going without oil - you will need a $3k cng lawn mower.
There are lots of emerging technologies that are now going into production that will prove the worth and the strategy of alternate energy over coal and/or NatGas.
BTW, I have hot water solar in Washington State. I cut my energy bill in half, even though it often is not working on cloudy winter days. Learn more. It will change how you think about this stuff.
The storage tanks there are overflowing, there is no shortage. What's missing is a pipeline to connect additional refineries to this source. This is several years away and the oil companies are in no hurry to complete this project. The Government is sleeping through this as if Bush were still President.
"economic crises caused by the massive jump in oil prices must certainly be classified a national emergency."
This is not a national emergency. If this routine interruption like the previous dozen or so was an emergency we would NOT be dependent on oil to extent we are. It's been 38 years since the first oil embargo and 50% of the oil we consume goes into automobiles. Many of these are the same gas guzzlers as 38 years ago. The only national emergency here is a lack of collective intelligence. Apparently we're just too stupid to operate an economy.
As was the case in 2008, the price rise is due entirely to speculation. Deregulation has allowed the futures market to be run like a casino. If you are serious about maintaining price stability, start by making the trading of commodities transparent and limiting the number of contracts that can be sold.
The greed and hubris will be our downfall...
Insofar as speculation, I suppose if enough nations heavily taxed profiting and turned this windfall back to the general population and toward alternative development it might help and be appropriate.