Biden Administration Grasping At Straws

[exchemist]

Back on the original subject, I read in today's FT that the price of crude has gone up in response to this Canute-like initiative of Biden's. So the whole thing has backfired. Apparently, the release from reserves is less than the oil traders expected ad secondly, the traders calculate that OPEC and Russia may well reduce their production to compensate for the extra amount released by Biden!

Analysts are commenting that this is misuse of the reserve, which is designed as a contingency stock for supply disasters, not as a (rather ineffectual) lever to influence the oil price under normal trading conditions.

So either he is badly advised, or this is a mere political gesture, to meet the customary demand from the US public that the president "Do Something!" whenever motor fuel prices are high. And, mark you, this comes a fortnight after COP26 when we all agreed to reduce our consumption of fossil fuels as fast as possible.

 

[Hold]

Back on the original subject, I read in today's FT that the price of crude has gone up in response to this Canute-like initiative of Biden's. So the whole thing has backfired. Apparently, the release from reserves is less than the oil traders expected ad secondly, the traders calculate that OPEC and Russia may well reduce their production to compensate for the extra amount released by Biden!

Analysts are commenting that this is misuse of the reserve, which is designed as a contingency stock for supply disasters, not as a (rather ineffectual) lever to influence the oil price under normal trading conditions.

So either he is badly advised, or this is a mere political gesture, to meet the customary demand from the US public that the president "Do Something!" whenever motor fuel prices are high. And, mark you, this comes a fortnight after COP26 when we all agreed to reduce our consumption of fossil fuels as fast as possible.

I believe the reserve oil was called the Naval Reserve and I assumed it was meant for Naval military purposes but I could be mistaken.

 

[exchemist]

I believe the reserve oil was called the Naval Reserve and I assumed it was meant for Naval military purposes but I could be mistaken.

That's interesting. But as I undertand it, this is held as crude, not as finished product ready for use by naval ships - which would be MDF, presumably.

 

[Hold]

That's interesting. But as I undertand it, this is held as crude, not as finished product ready for use by naval ships - which would be MDF, presumably.

I did find some information pertaining to my recollection of the title 'Naval Reserve'. However, perhaps there are alternatives for the Navy these days.I am posting the information about one of many oil fields that at least at one time were reserved for the Navy.
Production and political history[edit]
Associated Oil Company discovered the field in June 1911, with the drilling of their "Well No. 1," to a depth of 4,030 feet (1,230 m).

The official "discovery" well, however, was drilled by the Standard Oil Company ("Hay No. 1") in January, 1919.[4] By 1912 the field's capacity was considered to be significant enough that President William Howard Taft, concerned about the long-term availability of petroleum for the U.S. Navy, designated the region as the nation's first Naval Petroleum Reserve.

The dusty Elk Hills have a prominent role in U.S. political history, for it was the lease of this land by Secretary of the Interior Albert B. Fall, to Pan American Petroleum in 1922 in return for personal loans at no interest, that brought on the Teapot Dome scandal which ruined the reputation of the administration of Warren G. Harding, now commonly considered to be one of the most corrupt in U.S. history. In 1927 the U.S. Supreme Court invalidated the lease, and returned the Elk Hills to the U.S. government.[5]

 

[exchemist]

I did find some information pertaining to my recollection of the title 'Naval Reserve'. However, perhaps there are alternatives for the Navy these days.I am posting the information about one of many oil fields that at least at one time were reserved for the Navy.
Production and political history[edit]
Associated Oil Company discovered the field in June 1911, with the drilling of their "Well No. 1," to a depth of 4,030 feet (1,230 m).

The official "discovery" well, however, was drilled by the Standard Oil Company ("Hay No. 1") in January, 1919.[4] By 1912 the field's capacity was considered to be significant enough that President William Howard Taft, concerned about the long-term availability of petroleum for the U.S. Navy, designated the region as the nation's first Naval Petroleum Reserve.

The dusty Elk Hills have a prominent role in U.S. political history, for it was the lease of this land by Secretary of the Interior Albert B. Fall, to Pan American Petroleum in 1922 in return for personal loans at no interest, that brought on the Teapot Dome scandal which ruined the reputation of the administration of Warren G. Harding, now commonly considered to be one of the most corrupt in U.S. history. In 1927 the U.S. Supreme Court invalidated the lease, and returned the Elk Hills to the U.S. government.[5]

Amazingly, it seems that back in the 1920s the US Navy even contemplated running their own refineries, to convert the crude to fuel suitable for the vessels - and sell the fractions of the barrel that were not suitable, presumably. Seems crazy to a modern eye.

 

[metis]

Back on the original subject, I read in today's FT that the price of crude has gone up in response to this Canute-like initiative of Biden's. So the whole thing has backfired. Apparently, the release from reserves is less than the oil traders expected ad secondly, the traders calculate that OPEC and Russia may well reduce their production to compensate for the extra amount released by Biden!

Analysts are commenting that this is misuse of the reserve, which is designed as a contingency stock for supply disasters, not as a (rather ineffectual) lever to influence the oil price under normal trading conditions.

So either he is badly advised, or this is a mere political gesture, to meet the customary demand from the US public that the president "Do Something!" whenever motor fuel prices are high. And, mark you, this comes a fortnight after COP26 when we all agreed to reduce our consumption of fossil fuels as fast as possible.

That's really not correct as the influence of the release will take some time, plus OPEC is increasing at least somewhat their production.

IOW: patience.

 

[exchemist]

That's really not correct as the influence of the release will take some time, plus OPEC is increasing at least somewhat their production.

IOW: patience.

Traders react to the plan. They don't need to wait to see the physical barrels appear. But you are right of course that things can change - and we don't know for sure how OPEC and Russia will react. Traders are just taking a view on what they think is likely.

But in essence Biden is not in a position to change overall supply demand balance, given that there are other people who can twiddle their knobs in the opposite direction to him, if it suits them. I suppose the calculation will come down to how much OPEC countries need a certain level of immediate cash flow. If they cut back to negate Biden's efforts, they will sell less - and earn less. But the traders will have a far better insight into that that you or I. It's their job.

 

[metis]

Traders react to the plan.

But it's not just "the plan" they may react to as there's more issues at stake on this.

 

[exchemist]

But it's not just "the plan" they may react to as there's more issues at stake on this.

What do you have in mind?

 

[metis]

What do you have in mind?

First of all, oil prices are mostly influenced on international markets, thus not just American. Secondly, there are serious supply-line issues, which are gradually being ameliorated, but also less workers to do the deliveries and refining at the pre-covid pace. Thirdly, oil companies took a beating when the economies worldwide took a noser over the last two years, and they'd like to get some of their losses paid for. Fourthly, serious problems with the Ukraine & Russia, the latter of which supplies most of the EU oil and almost all the natural gas, are scaring the bejabbers out of these countries, and fear tends to drive up prices. And there may likely be more such issues that I'm not aware of.

IOW, there's a lot at stake and a lot involved here.

 

[exchemist]

First of all, oil prices are mostly influenced on international markets, thus not just American. Secondly, there are serious supply-line issues, which are gradually being ameliorated, but also less workers to do the deliveries and refining at the pre-covid pace. Thirdly, oil companies took a beating when the economies worldwide took a noser over the last two years, and they'd like to get some of their losses paid for. Fourthly, serious problems with the Ukraine & Russia, the latter of which supplies most of the EU oil and almost all the natural gas, are scaring the bejabbers out of these countries, and fear tends to drive up prices. And there may likely be more such issues that I'm not aware of.

IOW, there's a lot at stake and a lot involved here.

Yes, to sum up, the post-Covid rebound of economies has led to a global surge in demand for fossil fuel, which supply is not easily keeping up with, and some producing countries (e.g. Russia) see an opportunity to use this demand for geopolitical leverage. They key point is that this is not a N. American phenomenon. It is global.

 

[Jose Fly]

Back on the original subject, I read in today's FT that the price of crude has gone up in response to this Canute-like initiative of Biden's. So the whole thing has backfired. Apparently, the release from reserves is less than the oil traders expected ad secondly, the traders calculate that OPEC and Russia may well reduce their production to compensate for the extra amount released by Biden!

Analysts are commenting that this is misuse of the reserve, which is designed as a contingency stock for supply disasters, not as a (rather ineffectual) lever to influence the oil price under normal trading conditions.

So either he is badly advised, or this is a mere political gesture, to meet the customary demand from the US public that the president "Do Something!" whenever motor fuel prices are high. And, mark you, this comes a fortnight after COP26 when we all agreed to reduce our consumption of fossil fuels as fast as possible.

You do realize that the US isn't the only country opening up their strategic reserves, right?

China is joining the US and other countries in tapping emergency oil reserves - CNN

 

[Evangelicalhumanist]

I am ceaselessly amazed by Republicans (and Conservatives in Canada), for whom the "prime directive" seems to be minimizing government in the lives of the people ...


... and who, when anything goes wrong, blame the government!

I mean, really?