Although crude futures posted another strong advance in regular session trading (up 75 cents to $24.78), Platts OilGram, a well respected industry pub is saying Eng Sec Richardson is considering a Strategic Reserve oil sale. Oil has slipped about 20 cents in after hours trading. So first we get a Senate commitee report which explicitedly cited S Arabia, Kuwait, Venz, Col and Nigeria as potential y2k oilflow disruption risks, we get Schumer from NY rallying the troops for an SPR oil sale and noe the White House is apperantly interested. Will this provide a partial wakeup call in the oil sector and the economy on y2k probs?

-- Downstreamer (downstream@bigfoot.com), September 23, 1999

Answers

That makes no sense. The DOE just started re-filling the SPR this year by taking royalty oil in kind from offshore production. It's not filled yet. I could see the gov't trying to make a profit by selling at higher price levels than when it was pumped, but they don't need the money now, and the DOE is fully aware of the oil supply problem.

I would be amazed if a sale from SPR occurs this year.

-- Dog Gone (layinglow@rollover.now), September 23, 1999.

They better hold on...

-- Mara Wayne (MaraWayne@aol.com), September 23, 1999.

Why are they considering such a sale (if they are considering such a very bad idea at a bad time)? Why do they need the money? For what? Does the short term benefit outweigh the not so far away shortage? Will we take oil from foreign nations in the event of a shortage? By force?

Sincerely, Stan Faryna

-- Stan Faryna (info@giglobal.com), September 23, 1999.

P.S. What does it serve to have other nations think that we might sell SRO? What does it serve to have other nations think we aren't concerned about anticipated shortages?

-- Stan Faryna (info@giglboal.com), September 23, 1999.

I dont understand you guys. We all know there's gonna be rollover disruptions. Oil prices are bound for +$30. Thats exactly what this strategic reserve is for. Why would you bag on the government if they decide to release some meager supply streams to take the wind outa these hoarding economics?

-- Downstreamer (downstream@bigfoot.com), September 23, 1999.

Personally, I think it's all a bluff. They won't sell any of it. In fact we, the common citizens, won't get any of it either. It will all go to the military and government, who will use it themself (martial law) and possibly supply some critical industry uses such as power stations. That's it. Don't hold your breath waiting for some of this for your own car.

-- Gordon (gpconnolly@aol.com), September 23, 1999.

I don't know what you're talking about Downstreamer. Oil prices aren't even half of historical highs. The SPR isn't big enough to affect prices except short-term domestically. The SPR is really only a government supply depot, and if we ever have to rely upon it, it'll be used for fighter fuel and diesel for tanks.

The notion that the government is releasing meager amounts to manipulate world markets ignores market reality and flies in the face of recent government policy.

-- Dog Gone (layinglow@rollover.now), September 23, 1999.

Charles Schumer is a Communist. Period. The American Communist party openly campaigned for him in the recent elections and were quite proud of helping him win. C-span carried their national convention on tv earlier this year and that was one sorry site I'm here to tell you. Now why would a communist want us to sell off our STRATEGIC Reserves in advance of a coming known shortfall of imports and refining capacity?

-- Nikoli Krushev (doomsday@y2000.com), September 24, 1999.

Thanks for the update Downstreamer!

I still think we're headed to $50 a barrel.

Dog Gone,

How long has it been since they sold oil out of the SPR?

I have no idea, but I'd rather they start selling a little bit now, so that, like us, they know that their pumps will work properly after rollover. If they practice now, then there will be fewer screwups when we need them to be cranking out 4mb per day.

I agree that most of it will go to the military, and I'm not thrilled with the prospect for martial law, but for a while it will keep the .gov out of the private market's hair.

-- nothere nothere (notherethere@hotmail.com), September 24, 1999.

Dog Gone is right. They just started to add to it a few months ago. So, here are two reasons for the announcement:

1. They are trying to "spin" down the price of oil, to protect the economy of the US.

2. They have to get ready to have the processes, mechanics, regulations and customers to sell oil out of the SPR if (when) in 2000 there is an oil shortage.

(BTW, did you know Bill C. opened protected areas of Alaska to oil exploration a couple of years ago, over the protests of environmentalists, with oil at historically low prices? Kind of interesting.)

-- ng (cantprovideemail@none.com), September 24, 1999.