Strategic Petroleum Reserve Doubling

In the State of the Union address last evening the Prez indicated his Energy Secretary has requested to double the SPR… As many of you may remember the SPR was increased in 2005 from former lower levels. I found the announcement yesterday as a great idea on the part of the President, but it make you wonder why do it.

I think the policy is in preparation of an all out ME war in the event we leave Iraq with a power vacuum. It would also be very helpful to have this large reserve, two billion barrels to replace the ME oil as we starve out the ME warring nations of funds from oil.

The SPR was set up after the 1973-74 oil embargo to mainly support the military in combating the oil blockage if necessary and not intended for national use. The move last night seems to make you think that the extra billion barrels would be intended for national use to replace ME and Chavez oil over a period long enough to starve them out… do the math 8 or ten million barrels a day divided into 1 billion in reserve. The US government could easily move the price of crude oil by simply not importing ME/Venezuela for two or three months as those unfriendly countries masses lose income that normally flows from regular oil sales.

The Energy Policy Act of 2005 directed the Secretary of Energy to fill the SPR to its authorized one billion barrel capacity. This required the Department of Energy to complete proceedings to select sites necessary to expand the SPR to one billion barrels.

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DOE - Fossil Energy: U.S. Petroleum Reserves

I think it's a great idea, but it won't be enough time to starve out any of the countries we're not friendly with. Compared to our consumption, it's really not enough to last us very long.

That said, we're more concerned with world markets destabilizing than we are with losing our own oil supply, most of which comes from Mexico and Canada.

The SPR is there in case we need in for a national emergency - like, oh, a large-scale war where our supply of oil from elsewhere is threatened.

Given that, and what's going to happen to the world once the Dems force us to retreat from Iraq, just doubling the SPR isn't enough.

Bad idea. It'll just drive up the demand (and price) of oil, and put more money into the pockets of our enemies.

ashurbanipal said:

I think it's a great idea, but it won't be enough time to starve out any of the countries we're not friendly with. Compared to our consumption, it's really not enough to last us very long.

That said, we're more concerned with world markets destabilizing than we are with losing our own oil supply, most of which comes from Mexico and Canada.

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Let's see who are our friends?

The top sources of US crude oil imports for November were Canada (2.065 million barrels per day), Mexico (1.462 million barrels per day), Saudi Arabia (1.444 million barrels per day), Venezuela (1.069 million barrels per day), and Nigeria (0.919 million barrels per day). The rest of the top ten sources, in order, were Iraq (0.589 million barrels per day), Angola (0.505 million barrels per day), Algeria (0.253 million barrels per day), Kuwait (0.253 million barrels per day), and Ecuador (0.243 million barrels per day). Total crude oil imports averaged 9.836 million barrels per day in November, which is a decrease of 0.296 million barrels per day from October 2006.

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Crude Oil and Total Petroleum Imports Top 15 Countries

Mexico? Venezuela...NO!

Saudi Arabia and Kuwait could have oil stopped by a conflict in and around Iraq and if the conflict was caused by Iran Venezuela could also cut off our supply of oil. Regardless our imports as stated above were less than ten million barrels a day which would indicate even if Mexico cut our oil supply the additional billion in the reserve could replace the shortage for over ten thousand days. I'm not a math star so you calculate again but consider the entire 2 billion barrels in reserve.

The main worry is Venezuela, of course. I don't think anyone's too worried about Mexico intentionally cutting off our oil supplies (OTOH, Cantarell is in sharp decline).

It is likely that we would be able to protect tankers in the Gulf of Persia. The major concern there is the oil processing station at Ras Tanura, which is where the majority of Saudi Oil is processed. It could conceivably be hit by a missile from Iran, or by some other such menace. Due to the conflagratory nature of the station's products, if an explosive were to hit a critical target, there'd be one heck of a bang. I've heard some people estimate a conventional explosion on the order of 20-30 kilotons. But the real damage would come after, when the world would lose a significant portion of Saudi oil for an undetermined period of time. Most of that oil goes to Europe, so that's where the real hurt would be manifest.

Theoretically, we could make up a shortfall of Venezuelan oil with Iraqi oil pumped via pipeline into Turkey, but Iran might target those lines as well.

I'm not saying that war with Iran wouldn't hurt (which is why I think it's a dumb idea). I'm saying that the major concern isn't our own oil supply so much as that of people we do a lot of business with.

ashurbanipal said:

The main worry is Venezuela, of course. I don't think anyone's too worried about Mexico intentionally cutting off our oil supplies (OTOH, Cantarell is in sharp decline).

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The disputed winner of the Mexico Prez election was tight with Chavez. Mexico constantly likes to involve policy with the immigration policy and the death penalty and could use oil as a weapon if they saw weakness.

It is likely that we would be able to protect tankers in the Gulf of Persia. The major concern there is the oil processing station at Ras Tanura, which is where the majority of Saudi Oil is processed. It could conceivably be hit by a missile from Iran, or by some other such menace. Due to the conflagratory nature of the station's products, if an explosive were to hit a critical target, there'd be one heck of a bang. I've heard some people estimate a conventional explosion on the order of 20-30 kilotons. But the real damage would come after, when the world would lose a significant portion of Saudi oil for an undetermined period of time. Most of that oil goes to Europe, so that's where the real hurt would be manifest.

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If we cut and run the warring factions will be Saudi Arabia, Kuwait in support of Sunni's and Iran and Syria in support of Shiites... then in the north the Kurds would be weak for border fights with Turkey... But if Iran is in a spat with Saudi Arabia and Kuwait Iran would mine the Gulf passage or use UAV's to target "unfriendly tankers"... We would be forced to mind our own business since we are scared of ME folks.

Theoretically, we could make up a shortfall of Venezuelan oil with Iraqi oil pumped via pipeline into Turkey, but Iran might target those lines as well.

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You think pipe lines get blowed up now in Iraq wait till we leave.

I'm not saying that war with Iran wouldn't hurt (which is why I think it's a dumb idea). I'm saying that the major concern isn't our own oil supply so much as that of people we do a lot of business with.

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If Iran gets nukes they will simply state the price of a barrel of oil or not allow it to move out of the ME. Perhaps they will set up a tarriff or percentage cut for each barrel they allow safe passage for? I would guess it would be the US that closes the ME oil shipments to inflict pain enough to make them stop fighting.

Topsez said:

The disputed winner of the Mexico Prez election was tight with Chavez. Mexico constantly likes to involve policy with the immigration policy and the death penalty and could use oil as a weapon if they saw weakness.

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They could, but I nevertheless think it unlikely. They depend too much on their oil sales, and we pay promptly. They have no desire to anger America at the moment. Few other nations have the types of refineries necessary to handle Mexican oil, and for that reason they have few options about where to sell it.

Topsez said:

If we cut and run the warring factions will be Saudi Arabia, Kuwait in support of Sunni's and Iran and Syria in support of Shiites... then in the north the Kurds would be weak for border fights with Turkey...

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Yep. Which is why I hope we don't leave Iraq-if we do, we'll be back there in 2 years potentially facing not only Iran and Syria, but also possible China and Russia with nukes on the table. Not a situation we want to be in.

Topsez said:

But if Iran is in a spat with Saudi Arabia and Kuwait Iran would mine the Gulf passage or use UAV's to target "unfriendly tankers"... We would be forced to mind our own business since we are scared of ME folks.

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We'd be forced to go back or face an ignominious death. I suspect, however, that we will not be leaving Iraq any time soon.

Topsez said:

You think pipe lines get blowed up now in Iraq wait till we leave.

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Of course, most of my comments are contingent on the idea that we don't leave Iraq. If we do, all bets are off; the situation likely becomes too chaotic to predict. However, war with Iran may happen anyway. If it does, there's nothing preventing the Chinese and Russia from becoming involved--which would be a heck of a deal for us if we win because they own so much of our debt. On the other hand, that would be a long and bloody war, would probably involve theater-wide nuclear exchanges, and would essentially be World War III in earnest. War is seldom a good idea, and that war would be a paragon of this sentiment.

Topsez said:

If Iran gets nukes they will simply state the price of a barrel of oil

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I don't think they're quite that unreasonable, despite the picture that's been painted of them in the American press. They're as aware as anyone else that for their oil to mean anything, the world economy has to continue to function.

If Iran has any nuclear ambitions beyond simply having electricity 20 years from now, it's against Israel, not us. If they were to move against Israel, it would more than likely be a conventional attack anyway. They have no intention of actually destroying the land where the Dome of the Rock is located. They might be interested in MAD with Israel, however, ensuring that a conventional attack wouldn't provoke a nuclear response.

The Iranian oil sector is in fairly bad shape at this point, which is why they're pushing for nuclear technology in the first place.

Topsez said:

or not allow it to move out of the ME. Perhaps they will set up a tarriff or percentage cut for each barrel they allow safe passage for?

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Again, that would be madness, and they know it. Of course, they want as high a price for oil as they can get, but too high won't do them any good. Now, if they find a way to let oil out of the gulf to, say, China, then this might well be an effective strategy for them. But at the very least this would involve building a pipeline undersea across the gulf and through the FSU 'stans...not a feasible project for them.

Topsez said:

I would guess it would be the US that closes the ME oil shipments to inflict pain enough to make them stop fighting.

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And here's where it appears you realize that Iran wouldn't be wanting to do anything like what you just mentioned. They need to sell oil to survive, which means they need other people to buy it, at least while they transition to nuclear, which they will do, despite our sabre-rattling to the contrary.

Topsez said:

The disputed winner of the Mexico Prez election was tight with Chavez.

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No. The LOSER of the election was Chavez's ally.

Topsez said:

Mexico constantly likes to involve policy with the immigration policy and the death penalty and could use oil as a weapon if they saw weakness.

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No. If they cut off oil exports it would hurt them a lot more than it would hurt us.