Why the US stores 700M barrels of oil underground

Post by Spooky23 » Tue, Sep 22, 2015, 12:54 PM UTC

mediumdeviation wrote: post #15

jacobolus wrote: post #8

> But there’s an important line to draw between that and using an SPR for ad hoc manipulation of the world’s markets. On this point, Martin Young is emphatic: “The oil stocks are not there for price management as such,” he explains, “they’re there to correct a shortage in the market because of a supply disruption.” Strategic reserves can absolutely also be used as an offensive economic weapon, however. As one example…

That's interesting, but how is any commodity able to have it's price pushed down by a single seller dumping from a fixed reserve? If the market notice that the extra supply is coming from a fixed reserve, then they'd rightly be able to infer that at some point the supply will run out, and prices will return to market value, which would in turn drive up prices again. It probably won't go back to the previous equilibri…

Post by cloakandswagger » Tue, Sep 22, 2015, 1:04 PM UTC

Shivetya wrote: post #10

jacobolus wrote: post #8

> But there’s an important line to draw between that and using an SPR for ad hoc manipulation of the world’s markets. On this point, Martin Young is emphatic: “The oil stocks are not there for price management as such,” he explains, “they’re there to correct a shortage in the market because of a supply disruption.” Strategic reserves can absolutely also be used as an offensive economic weapon, however. As one example…

I am not beyond believing that the current gutting of oil prices was done at the US's behest to damage Russia. It wouldn't take too much in the way of guarantees to Saudi Arabia to have them swamp the markets. Far more effective than military intervention.

Post by jacobolus » Tue, Sep 22, 2015, 1:08 PM UTC

minikites wrote: post #31

refurb wrote: post #28

Earlier quoted context omitted.

the US dumped >250,000 tons of copper from its strategic reserves onto the world market Do you have a source with more details? 250,000 tons of copper doesn't really sounds like much. Wikipedia says annual WW production is 18M tons, so the US dumped 1.4% of one's year production on the market. Sure, enough to depress prices, but for how long? It would seem like you'd need to keep dumping over a long period of time ot…

Was that the annual production now or in the 70s?

Post by Scarbutt » Tue, Sep 22, 2015, 1:15 PM UTC

retube wrote: post #21

Shivetya wrote: post #10

Earlier quoted context omitted.

I am not beyond believing that the current gutting of oil prices was done at the US's behest to damage Russia. It wouldn't take too much in the way of guarantees to Saudi Arabia to have them swamp the markets. Far more effective than military intervention.

Sorry but that's nonsense. It's a well known and indeed publically admitted strategy by the Saudi's to drive US shale producers out of business. Google "saudia arabia united states oil price" for many authoritive hits on the subject. Russia was collateral damage.

Post by cylinder » Tue, Sep 22, 2015, 1:22 PM UTC

Synaesthesia wrote: post #17

Shivetya wrote: post #10

Earlier quoted context omitted.

I am not beyond believing that the current gutting of oil prices was done at the US's behest to damage Russia. It wouldn't take too much in the way of guarantees to Saudi Arabia to have them swamp the markets. Far more effective than military intervention.

It's certainly not beyond conception! As Assange mentioned in this interview, a wikileaks cable showed how the US departments all work together to achieve a Foreign Policy aim, for example when a a country needs to be isolated by the they work together to apply pressure in the economic, diplomatic, military and public relations realm. https://www.youtube.com/watch?v=W3HWiydFlJc