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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (188673)	6/7/2006 12:38:11 PM
From: michael97123	Respond to of 281500

That is what the SPR is for.

To: Hawkmoon who wrote (188673)	6/7/2006 1:28:53 PM
From: jttmab	Read Replies (1) \| Respond to of 281500

How about something as simple as matching Iran's heated rhetoric about cutting off oil supplies with the threat to match any loss with sales of oil from the Strategic Petroleum Reserve?? We have 680 million barrels locked away right now there and Iran only produced 2.6 million export barrels per day. I don't have a problem with that. I do have a long standing question though, perhaps you can answer....We buy oil for the SPR on the open market. When we release oil from the SPR, how does that work..., e.g., does Exxon-Mobil buy the crude from the SRP at current market prices? Does the SRP discount it? Can Exxon-Mobil buy crude from the SPR, process it into gasoline, etc... and then sell it in the global market? Could communist China, for example, end up buying gasoline that came from the SPR? If we bought crude for the SPR at one market price and sold it a different market price, how is that accounted for? If the US pays $70/barrel and sells it at $100 per barrel, where does the $100 barrel go? Is it Federal Revenue? Does it go into some slush fund for future puchases into the SPR? And yeah.. it might prove a hollow threat since it might only impact prices for a year or so.. but it will certainly put a dent in the ability of OPEC to manipulate prices in the monopolistic manner they have been. OPEC may be a cartel, but it's not a monopoly. It wouldn't do any good for OPEC to increase oil production. They could glut the market with oil and force the price of oil down, but then the prices of US oil would go down as well. As would the price of Canadian oil and Mexican oil. Consequently, Exxon-Mobil profits would go down. And if the price of oil goes down far enough, exploration is not economical and ethanol isn't economical which then puts the ethanol companies out of business. Which is what happened in the 80s. And we come full circle once again. Other than that, it's a great idea. jttmab