Good idea or bad? What effect will it have?

personally i think obama is doing it strictly because its politically inconvenient for him to have high gas prices leading up to an election. I cant imagine 30m barrels is going to have any effect on prices long term, and i wonder what its going to do short term...USA imports almost 10m barrels a day to supplement the 9m barrels we produce, so we are giving ourselves a 3 day supply of oil...several articles i have read dont see gas going below $3/gal no matter what we do.

i think that the strategic reserve is not big enough...we use roughly 20m barrels a day, so with the 700ish million barrels we have that is a little over a 1 month supply. I think given the instability in the middle east and the lack of domestic production warrant a serious increase in the strategic reserve. because i seriously doubt that any major supply interruption is going to be resolved in a month.

It's pretty obvious that speculation keeps driving the price higher since basic economic principles don't support the current high oil price levels.

On the one hand, you have the free marketers stating that this is just another example of the government manipulating the markets by releasing more oil into the market. This is an interesting opinion considering that markets controlled by Opec aren't exactly free markets.

On the other hand, the economy is stalling and many economists predict that without stability in oil prices, the economy will continue to be soft. Of course it's in the best interest of the government and ultimately the rest of us (unless you're an oil speculator) that prices stabilize to support the weak economy.

At the end of the day, i suppose it is a form of government intervention into markets, but as i stated, Opec isn't exactly a free market enterprise. I'll side with the government and take my chances.

 

Originally Posted by NUTZREALHUGE

i think that the strategic reserve is not big enough...we use roughly 20m barrels a day, so with the 700ish million barrels we have that is a little over a 1 month supply.

the only thing to learn here is the u.s. reserves are a joke.

side note: I love when people spout off about the limitless oil we'll have if we ever decide to drill in alaska. go ahead and look up how much oil is actually there.

that's easy to say in 2011.

and the 30 million barrel injection is a non-story. it's going to correct prices downward temporarily bla bla bla but then what? it also comes at the price of depleting the reserve. and looking months or years ahead we'll be in the exact same situation.

 

Of course it's in the best interest of the government and ultimately the rest of us (unless you're an oil speculator) that prices stabilize to support the weak economy.

Right, "speculators" such as airlines and other industries that "speculate" on future oil prices in order to ensure themselves a stable price over a set period of time would be against oil price stability. That makes sense...

Speculators make oil prices more stable than they would be otherwise. If you want an example, look at onion prices prior to and after the law making it illegal to trade onions on the commodity markets. Afterwards onion prices are much more erratic and less stable than they were prior to the dumb law.

 

On the one hand, you have the free marketers stating that this is just another example of the government manipulating the markets by releasing more oil into the market. This is an interesting opinion considering that markets controlled by Opec aren't exactly free markets.

It becomes an even more interesting opinion when you take into account that if the government doesn't release the oil then they are manipulating the markets by keeping oil off the market. This argument in terms of "messing" with the free market was over as soon as we started having a federal oil reserve.

 

I'm not sure when or why government intervened to prevent the trade of onions. Sounds like an interesting case study.

 

If Sanders and other economic illiterates get their way, we'll have new laws banning "speculation." That will raise prices further. Don't believe me? Think back to a previous time when a Senate committee said that "speculative activity causes severe and unwarranted fluctuations in the price. ..." That was in 1958, when people got upset about the price of onions. Fools in Congress addressed that problem by banning speculation on onion prices.

The result? A Financial Times analysis found that the ban made prices less stable. This year, the retail price of onions rose more than the price of gasoline -- 36 versus 24 percent. Most years, the price of onions fluctuates more than other goods. No mystery there. Speculators help keep prices stable. When they foresee a future oil shortage -- that is, when prices are lower than anticipated in the future -- speculators buy lots of it, store it and then sell it when the shortage hits. They know they can charge more when there's relatively little oil on the market. But their selling during the shortage brings prices down from what they would have been had speculators not acted.

http://www.freedompolitics.com/artic...eculators.html

OPEC is the issue here. How we've let em get this powerful shows how corrupt our politicians can be. Scratch my back, I'll scratch yours. GE is catching up with an impressive list of political puppets of their own. The country that invented the light bulb is making it illegal to buy one. Stop the madness.

China locked in 20 bucks a barrel from Russia for how long was it? the next decade? China could be our wholesaler.

 

Originally Posted by saxman

It's pretty obvious that speculation keeps driving the price higher since basic economic principles don't support the current high oil price levels.

What evidence do you have to support this?

 

Originally Posted by AFink93

Supply isnt the problem. We have plenty of oil..

Yes for $90 a barrel you can have all the oil you like. And thank god for that.

lol half-black presidents

in before ud says bush tapped it too because I can't remember and too lazy to google

http://reason.com/blog/2011/05/05/na...eculators-cond

http://reason.com/archives/2011/05/0...and-the-market

 

The price of crude during the months of the alleged misdeeds changed very little, generally staying within a $10 range but the traders made their money off the daily fluctuations.

So in other words, even when speculators manipulate the market it doesn't really affect overall prices? If so then how does your "run of the mill" speculating raise prices? It makes sense that a lot of today's oil prices are set by speculation when the whole world is warning of coming shortages in oil and energy.