Should we dip into our strategic reserves?

Dedman · Post by **Dedman** » Mon Mar 22, 2004 12:16 pm

The following article appeared in the New York Times Op-Ed page today. I think the author makes a good point about higher fuel economy standards. I also agree that the nationâ??s reserves should be left alone right now. What do you think? Will higher fuel economy standards help? Will that raise the cost of new cars to prohibitively high levels? Should we dip into our oil reserves?

Living in GA I pay some of the lowest gas prices in the country. I canâ??t imagine what some of you in CA are paying. I am interested in what you think.

I am not addressing alternative fuels here because that was done to death in a previous thread.

Pinch at the Pump

The cost of gasoline is rising again. The average price reached $1.72 a gallon last week, just a couple pennies below the all-time record. Without a turnaround in the price of oil, which has roared to a one-year high of $38 a barrel, or a magical increase in refining capacity, prices are likely to rise higher still. This means discomfort for motorists and real pain for truckers and airlines. It also means, this being an election year, a certain amount of political grandstanding. If the Senate's initial response is any guide, Washington will choose short-term fixes over the tougher long-term solutions required.

The Senate's response to inflation at the pump was an unenthusiastic vote â?? 52 to 43 â?? to divert millions of barrels of oil earmarked for the Strategic Petroleum Reserve for sale on the open market. The House has yet to concur while the administration opposes the idea, arguing that it is more important to fulfill President Bush's post-9/11 pledge to fill the reserve to its 700 million-barrel capacity.

There's nothing inherently wrong with using the reserve to help relieve market pressures on a temporary basis â?? President Clinton tapped the reserve for about 30 million barrels in 2000 to ease a shortage of home heating oil in the Northeast. But it should be done sparingly. The main purpose of the reserve, after all, is to provide backup supply in a genuine national emergency, and a price spike is not a national emergency. If we did, for some reason, decide to use the reserve to drive down prices, it would only work at the margins and for a short time. The reserves are no match for the pricing power of oil-producing countries like Saudi Arabia. The Persian Gulf nations alone produce 900 million barrels a year, half again of what lies in the salt domes of Texas and Louisiana.

A much better way to strengthen America's leverage, as this page has suggested before, is for the United States to limit its own consumption of energy. There are many ways to do that, but the most straightforward is to raise fuel economy standards by significant amounts. This is exactly what the country did after the oil shocks of the 1970's, resulting in huge savings in imported oil.

Unfortunately, memories are short in the United States Congress. The energy bills that have passed the House and await action in the Senate not only ignore fuel economy. They also encourage the unhealthy fiction that a country that uses about one-quarter of the world's oil but owns just over 2 percent of the world's reserves can somehow drill its way out of dependency. It can't be done. Until the nation faces up to that fact, it will remain dependent on a few important producers, and its economic and strategic vulnerability will continue.

bash · Post by **bash** » Mon Mar 22, 2004 12:24 pm

The reserve is there for one purpose; to sustain a war if the Arabs ever tried to cripple the world economy, which they could do by turning off the tap. Quite simply, if they tried that we would be forced to take their oil fields and would need fuel to sustain that effort. That reserve is a small deterent against such a scenario. I don't believe it would be in our interest to deplete it and lessen that deterent's power, especially at a time when we're pissing off our *friends* the Saudis by insisting they institute democratic reforms.

On a positive note, however, we Americans are wedded to our cars while all sorts of mass transit alternatives exist and if a little tight squeeze at the pump changes our culture of the automobile even just a little, imo, it's worth the sacrifice.

index_html · Post by **index_html** » Mon Mar 22, 2004 1:32 pm

Pushing energy conservation and energy efficiency just seems pragmatic to me. I've heard more than a few arguments against it and don't find any of them compelling. Taking the initiative and heading off a potential energy crisis is the smart move any way you cut it. Alternative fuels like hydrogen will change things dramatically once they're refined and financed.

The EERE seems to be serious about it:

Mission

Congressional testimony 2001

Dipping into the reserves should be avoided unless there is a dire need imho.

Tyranny · Post by **Tyranny** » Mon Mar 22, 2004 3:32 pm

pfft...I wish it was a $1.72 a gallon here. Personally I think the oil companies are screwing the populace and a federal investigation needs to be started.

Like that will really happen though.

DCrazy · Post by **DCrazy** » Mon Mar 22, 2004 4:32 pm

It's not the oil companies' fault... the price of oil is public, and is greatly determined by demand vs. supply, which is highly affected by OPEC's decisions on raising or lowering production, as well as American car use or new housing starts, for example.

Vertigo · Post by **Vertigo** » Mon Mar 22, 2004 4:37 pm

Don't complain... we pay 1.1 euro for a liter of feul, atm

Avder · Post by **Avder** » Mon Mar 22, 2004 10:02 pm

Start a price fixing investigation, and eleiminate the "light truck" loophole for SUV's. Also raise fuel economy standards for ALL Cars, Trucks, and SUV's.

Delkian · Post by **Delkian** » Mon Mar 22, 2004 10:07 pm

bash wrote:On a positive note, however, we Americans are wedded to our cars while all sorts of mass transit alternatives exist and if a little tight squeeze at the pump changes our culture of the automobile even just a little, imo, it's worth the sacrifice.

What the heck? I agree with bash!

Tyranny · Post by **Tyranny** » Tue Mar 23, 2004 12:22 pm

That might be true DCrazy, but there isn't a reason for the gas prices to stay level for a certain period then go up almost 30 cents in a weeks time, stay that way for a few months, then drop back down.

To me it looks like price fixing for a companies financial benefit and nothing more. It's almost $2.00 a gallon here in Mesa Arizona. The last time the prices were this high was when a pipeline supposedly burst somewhere between Phoenix and Tuscon last year and the whole Valley had price hikes, even though most of our supply doesn't even come from a local line, we get most of our supply from California as well as other states. So a local pipeline malfunction shouldn't have hiked gas prices for the whole valley in the least bit.

It's just extremely frustrating. I can't even imagine what Cali is going through right now.

DCrazy · Post by **DCrazy** » Tue Mar 23, 2004 5:09 pm

Here, regular unleaded is $1.80. Long Island, known far and wide as second only to California in car addiction, also boasts the country's busiest commuter railroad service, as well as its own expansive network of buses. Yet people continue to take their cars.

The point I'm making is that the simple presence of mass transit won't do anything. Not only must the system be viable, but it must be more convenient. You can go anywhere in a car; buses and trains have fixed routes. It costs me $127 a month for an unlimited train ticket, and $70 a month for infinite free rides on the NYC Subway and any bus system in NYC or Nassau County, Long Island (Long Island Bus). People have to begin to realize that this might be less than the cost of fuel.

Top Gun · Post by **Top Gun** » Tue Mar 23, 2004 5:39 pm

To those arguing in favor of mass transit use, I agree that that is a very viable and favorable option, in urban areas that is. I live in the Philly suburbs, and the only mass transit around here is rail lines leading into Philly. In the 'burbs, you can't get anywhere without driving a car, not to mention in more rural areas. While mass transit is part of the answer, it is not the whole answer; we must continue to work on development of fuel cells/hybrids to minimize gas consumption.

Tyranny · Post by **Tyranny** » Tue Mar 23, 2004 5:44 pm

Here...

Average Unleaded Prices

Reg. $1.91
Mid. $2.00
Prem. $2.11

and then...

Deisel $1.85

We've got four vehicles, so it kind of makes it difficult right now. Other then the valley metro (bleh) and taxi services, there isn't any other means of transportation until the Light Rail gets underway, whenever that will be.

DCrazy · Post by **DCrazy** » Tue Mar 23, 2004 5:48 pm

Tyranny, Minnesota, correct? MN light rail has been a subject of some interesting discussion at SubTalk.

Lothar · Post by **Lothar** » Tue Mar 23, 2004 6:26 pm

See bold section:

That might be true DCrazy, but there isn't a reason for the gas prices to stay level for a certain period then go up almost 30 cents in a weeks time, stay that way for a few months, then drop back down.

To me it looks like price fixing for a companies financial benefit and nothing more. It's almost $2.00 a gallon here in Mesa Arizona. The last time the prices were this high was when a pipeline supposedly burst somewhere between Phoenix and Tuscon last year and the whole Valley had price hikes, even though most of our supply doesn't even come from a local line, we get most of our supply from California as well as other states. So a local pipeline malfunction shouldn't have hiked gas prices for the whole valley in the least bit.

It's just extremely frustrating. I can't even imagine what Cali is going through right now.

Ferno · Post by **Ferno** » Wed Mar 24, 2004 1:14 am

Simple solution: get a motorcycle.

five bucks will last you a whole week. maybe more.

and if you need to haul some junk, there's trailers for motorcycles available.

Tyranny · Post by **Tyranny** » Wed Mar 24, 2004 11:43 am

Thx Lothar

The Lightrail here will most definitely be in Phoenix to start with. Eventually spreading to Tempe, Mesa, Chandler etc etc....

I haven't actually seen the plans for it myself, might not even get out to Mesa or Chandler at all but we'll see.

Oh, and when I went to put gas in my Mom's car last night Unleaded was $1.94 now