"If this wasn't an election year, I don't think we'd see the oil. I do think it's politically motivated. They are setting a precedent here.
I'm still calling this a correction in the up-trend. I don't think we've seen the last of high crude oil prices.
The problem has not been crude supply, it has been product supplies.
You could see a dollar or two on the downside, but I have my doubts it is going to fix the problem of heating oil. Three-quarters of the price fall has already been priced in."
Tom Benz, Senior analyst at Paribas Futures in New York, Sept.22
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"It's a very symbolic gesture. There may be a problem when you really need that reserve. I don't think we're in a crisis mode.
U.S. refineries are running at 94.7% of their capacity. We're running full-tilt. You've got to turn that crude into usable oil. It's not like you can just open the spigot, and out pokes fuel oil.
If you look at the real price of oil versus just about every other thing that we consume today, oil is still dirt cheap. It's probably one of our most resourceful commodities that we have.
You get a lot of bang for your buck with a barrel of oil. This economy has done very well over the past few years, and to a large part it has been because the price of oil was so cheap."
Donato Eassey at Merrill Lynch, Sept.22
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"Adding government oil to the market at a time when refiners already are running close to their capacity doesn't make economic sense. The oil would go to a tank, and it's going to stay in the tank, as refiners can't boost processing rates, he said.
Much of the additional supplies from Saudi Arabia, the world's top producer, and other OPEC members is of a less desirable 'heavy' grade of oil that's more difficult and costly for refiners to process into gasoline, heating oil and other fuels. The SPR oil also consists of this caliber of oil. It's heavy crude oil, not the light they need."
Leo Drollas, deputy executive director of the Centre for Global Energy Studies in London, Sept.22
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"The major producers appear to be doing all they can to get as much oil as possible to market to take advantage of high prices, despite accusations to the contrary by Vice President Al Gore and other politicians.
These companies are not idiots -- they would be producing as much as they can. Perhaps (critics) can point the finger of blame at companies who are effectively producing all they can. They're an easy target, but they're probably the wrong target."
Banc of America Securities analyst Tyler Dann, Sept. 23
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"Oil companies, large and small, cannot just turn on and off their production every time the price goes down or up. It takes a while to mobilize and demobilize."
Fadel Gheit, energy analyst for Fahenstock & Co, citing the decline of existing fields and long periods of time it takes to get new reserves to market.
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"Refinery capacity hasn't increased in more than a decade because of weakness on that side of the business. The existing refining infrastructure is unable to convert incoming crude into enough gasoline, heating oil and other products to meet demand."
Bill Gilmer, oil analyst with the Federal Reserve Bank of Dallas, Sept. 23
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Referring to the release of crude oil from the reserves:
"The difficulty here is trying to estimate to what extent the market has already priced this in. We're already well off our price highs and there had been numbers mentioned as high as 60 million barrels. The market may see a relief rally on Monday as some traders decide that the size of the release could have been worse.
We'll also have to see how quickly the DOE can actually execute this plan because they need to find a home for it in terms of someone to deliver the oil to, and it might take a couple of weeks to negotiate the terms for that and to start the oil flowing."
Tim Evans, a senior energy analyst at New York-based IFR Pegasus, Sept.23 |
