Even Carpe Diem Confused About Tapping the Strategic Petroleum Reserve

Link here.

Gasoline prices have been dropping steadily for the last six weeks, and the current price of $3.62 per gallon (national average) is the lowest in three months and almost 8% below the recent peak of close to $4 per gallon in early May (see chart above).  America's  stock of crude oil for the week ending June 17 was at the highest level (1.065 billion barrels) in more than four month since early February.  So what's the administration's "solution" to the "non-problems" of rising oil supplies and falling oil and gas prices?

Tap into America's "Strategic Petroleum Reserve" for 30 million barrels of oil, enough for about 36 hours of domestic consumption, while at the same time opposing any legislation that would allow greater access to domestic oil supplies.

It looks like everyone is confused. 

"Big Oil" May Not Request Oil From Reserves --- They Probably Don't Need It -- More on the Release of Oil From the Reserves

The devil is in the details. Link here.

Just because governments around the world say they are going to release oil from their strategic petroleum reserves, it doesn't mean that they will actually deliver any oil from their reserves:

Karen Matusic, a spokeswoman for ExxonMobil, the world’s biggest oil refiner, declined to comment on whether the company plans to request any supplies from the strategic reserve. Chevron and Shell also declined through spokesmen to discuss their crude needs or attitudes toward the availability of strategic stockpiles. 

And then this:

Storage tanks used by oil producers at the crude-trading hub in Cushing, Oklahoma, held 38 million barrels as of June 17, 41 percent above the five-year average for this time of year, according to Energy Department figures. Stockpiles at Cushing reached 41.9 million barrels in April, 2011, the highest point since at least 2004, when the Energy Department began tracking the figures. 

U.S. crude imports are almost 10 percent lower than a year ago. Refiners brought 9.15 million barrels a day of oil into U.S. ports last week, down 9.5 percent from the same week in 2010, according to Energy Department data. Demand for foreign crude in the world’s largest economy dipped to a 24-month low of 7.69 million barrels a day in December.

“This action today will do nothing to benefit consumers,” Charles Drevna, president of the National Petrochemical & Refiners Association, said in a statement. “Instead, it leaves our nation vulnerable if hurricanes, other natural disasters or a foreign crisis causes a real supply shortage.” 

Interesting, very interesting.

The 60-million-barrel release is scheduled for the next 30 days. I assume all oil that is being delivered over the next 30 days is already contracted. Much of this oil is already in storage containers and much of it is slogging its way across the oceans. This whole announcement seems really, really bizarre.

It will be interesting to see how much oil is actually requested; I wonder if the administration will provide that figure.

IEA, Bloomberg, Others: Saudi Not Able to Make Up Shortfall

Earlier today, in response to the news that 60 million bbls of oil was going to be released from worldwide strategic reserves, I wrote that that world was awash in oil. That was earlier to day.

Now, I see there is an article from Bloomberg that confirms what I wrote:

The supply addition comes at a time when refiners in the world’s biggest economy have more crude on hand and are importing less as demand for fuels such as gasoline and diesel is slipping, according to Energy Department figures. The National Petrochemical and Refiner’s Association criticized the decision to tap the strategic reserve as a political move that “makes no sense” and “will do nothing to benefit consumers.” 

The story continues:

“This is kind of a head-scratcher because we’re just not in a situation in the U.S. where we physically need more barrels to meet demand,” Blake Fernandez, an energy analyst at Howard Weil, said in a telephone interview. “This looks more like a perception move by the U.S. government and the Europeans to alleviate high crude prices.”

Earlier today:

The U.S. and 27 other nations pledged today to tap government-controlled oil inventories after civil war in Libya disrupted crude shipments and Saudi Arabia failed to persuade fellow members of the Organization of Petroleum Exporting Countries to plug the gap with increased output.

In other words, Saudi is NOT able to make up the shortfall, something I have said more than once in the past year.

This is the third release from strategic reserves. The first two were more like "real" emergencies.

IEA members have conducted coordinated releases of emergency stockpiles on two other occasions since the group was founded in 1974. The first was during the 1991 Persian Gulf War; the second was in the aftermath of Hurricane Katrina which slammed into U.S. refineries and offshore oil platforms in 2005.

Midcontinent Storage On Pace to Increase 60 Percent Within Five Years -- Due to Bakken

Link here.

BENTEK Energy reports that crude oil production in the U.S. PADD 2 (Midcon) region is on pace to increase 60 percent over the next five years, with continued Bakken drilling activity and emerging oil plays in Oklahoma expected to push oil production in PADD 2 to 1.4 million b/d by 2016.

The Montana and North Dakota Bakken will contribute 418,000 b/d over the five-year period, while the continued development of conventional resources in PADD 2, especially in Oklahoma, contributing 90,000 b/d to the total growth. "This rapid increase in oil production is expected to put additional pressure on the already constrained Cushing market," BENTEK noted.

PADD 2 is home to some of the hottest unconventional oil and rich-gas plays in the U.S. Besides the Bakken, PADD 2 is home to several Oklahoma plays, including the Granite Wash, Cleveland Sandstone, Tonkawa, Cana Woodford, Arkoma Woodford and Mississippi Lime plays.

Headline Story -- Rigzone: North Dakota Booms Into Energy-Rich Era

Link here.

Due to rich petro-resources, some believe that North Dakota is on the way to surpassing even Alaska to become the second largest oil and gas producing state in the nation after Texas, reported the Anchorage Daily News in January.

And it's happening fast.

North Dakota is already the nation's fourth largest oil and gas producing state; California is third.

Exploitation of the Bakken and Three Forks oil shale formations and adjacent Sanish area are sparking a big boom in petro-production in this Great Plains state.

There's nothing in the article "we" didn't already know but it's exciting to see the headline story in Rigzone.com.

EPA Selects Killdeer in Dunn County to Test Fracking Impact on Drinking Water

Updates

(Related) July 1, 2015, The Sidney (MT) Herald is reporting:

As many of you have heard, the Environmental Protection Agency released the results of a five-year study on hydraulic fracturing liquids and the risk they potentially have on clean drinking water around well sites.

The EPA has ruled out that the slew of chemicals used in fracking does not pose a significant threat to drinking water resources around drill sites. This news is a resounding defeat for environmentalists who have been arguing against the industrial practice since its mainstream arrival in 2004.

Killdeer, N.D., in Dunn County was one of the six target locations in the study. The other five were in Wise County, Texas, Bradford, Susquehanna and Washington counties in Pennsylvania, and Las Animas and Huerfano counties in Colorado.

Water, which composes a little under 90 percent of the chemicals used in fracturing fluid, has the potential of running into underground aquifers and surface water. The controversy surrounding the practice has caused states like New York and Maryland to ban the practice for two to three years. The French parlément has banned it nationally and in its sovereign territories across the world.

The EPA said that they “...conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources,” they however, “...did not find evidence that these mechanism have led to widespread, systemic impacts on drinking water resources in the United States,” according to the EPA’s Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources released on June 1.

(Unrelated) May 13, 2015: results of the retrospective case study, hydraulic fracture, blowout, Killdeer, Dunn County; the Franchuk 44-20 SHW well; during the 5th stage of a 23-stage fracture;
(Unrelated) Undated, Retrospective Case Study, hydraulic fracture, blowout, September, 2010;  

Original Post
Link here. Regional links break early.

Killdeer in Dunn County was chosen for a study focusing on hydraulic fracturing’s impact on drinking water, the Environmental Protection Agency announced today.

The EPA has identified seven case studies. The sites chosen were selected following extensive input from stakeholders, including the public, local and state officials, industry and environmental organizations, according to the agency.

The EPA will begin field work in some of the selected regions this summer.

I could be wrong, but of the seven sites, it looks like Dunn County is the only site targeting deep formation oil; the other sites target natural gas. (I could be wrong; I'm not sure about one or two of the other sites.)

EPA does not include Wyoming in fracking study; assumption is that Wyoming has adequate oversight of fracking.

Headwaters of the Missouri -- Where It All Starts

Link here.

A nice blog on the headwaters of the Missouri River.

Water from Hell Roaring Creek will be barreling through the Oahe Dam, hundreds of miles from where it started. And this creek, like much of the Missouri, is flooding. The creek had pushed its banks and was running through the low meadow surrounding it. And hey, I’m no weather or water guru, but there is a lot of snow up there for this time of year. It’s all everyone we ran into was talking about. I’ve spent summers up there every year of my life since I was just a bump in my mom’s belly. And I’ve never seen that much snow in June. Especially not mid-June. May, maybe. The west is a big mess of water this spring and summer.

Beautiful pictures; nice post. 

Admits To Slow Rolling the Oil Industry -- Promises To Speed Things Up By Yearend -- Update on the Permitorium

Updates

August 6, 2011: folks write me (anonymously) suggesting that I am confused about the permitorium. I generally don't post comments that don't have value-added information, so most of those comments are not posted. But for those who still think there is no permitorium in the Gulf, a US senator says he will hold up Senate nominations until/unless the leases due to expire this year in the Gulf are extended. Yup, the permitorium continues.

US Sen. David Vitter (R-La.) announced that he would block Rebecca Wodder’s nomination to be Assistant US Interior Secretary for Fish and Wildlife and Parks unless the US Department of the Interior extends hundreds of Gulf of Mexico leases due to expire this year.

Vitter said that oil and gas exploration in the gulf has fallen dramatically since US Interior Sec. Ken Salazar imposed a temporary deepwater drilling moratorium following the Macondo well blowout and subsequent crude oil spill in 2010.

Original Post

Link here.

I guess it was true. The administration was slow-rolling the oil industry on granting leases or permits or whatever the case might be. The story changes from day-to-day, and depending on who is talking.

Secretary of the Interior Ken Salazar says things will speed up by year end (2011) implying that the oil industry was correct in saying that for the past year talk of faster permitting has been just that: talk.

The US Bureau of Land Management will accelerate a lease sale within the National Petroleum Reserve-Alaska so that it will take place before the end of 2011, with subsequent lease sales annually, US Sec. of the Interior Ken Salazar said.

Salazar’s announcement came as the US House Natural Resources Committee’s Energy and Minerals Subcommittee held a hearing on a bill to improve access to oil and gas resources within the reserve. Doc Hastings (R-Wash.), the full committee’s chairman and HR 2150’s sponsor, said requiring annual NPR-A lease sales was a good step, but it would not be enough if other federal agencies block and delay permits for the necessary roads, bridges, and pipelines to get the oil and gas out of the reserve.

In his written testimony, Joe Balash, deputy commissioner of Alaska’s Department of Natural Resources, said Alaska considers leasing within NPR-A a logical first step in expanding oil and gas development on federally controlled state land. He said in his written testimony that possibly the most ambitious feature of Hastings’ bill is its call for approved rights-of-way for roads, pipelines, and other surface infrastructure to ensure all leases are within 25 miles of the state’s approved route plans.

But then this:

But Deputy BLM Director Mike Pool said Interior was concerned about several of HR 2150’s provisions, including a requirement that the secretary consult with the US Department of Transportation on all surface disturbance instead of only major roads and pipelines; a requirement that the secretary ensure that other federal permitting agencies meet the bill’s deadlines; and an implication that all requested permits must be issued regardless of a proposed action’s potential impacts or the availability of alternatives.

Sounds like "we" have a long way to go. I guess it's easier to release oil from the strategic petroleum reserve than to issue new permits.  

And then there's this story (safety is important, but the bureaucratic process will slow everything down):

The government is poised to propose new rules that aim to boost the safety of offshore drilling and tighten standards for emergency equipment guarding subsea wells, a top regulator said Wednesday.

The looming rules will build on already broad changes that the Bureau of Ocean Energy Management, Regulation and Enforcement has imposed since last year's Gulf oil spill, agency director Michael Bromwich said in a speech before the World National Oil Companies Congress in London.

For instance, regulators are planning to add teeth to a workplace safety rule they imposed last October requiring oil and gas companies to identify risks at every stage of offshore exploration and take steps to minimize human errors and operational hazards. That rule for the first time is forcing companies in U.S. waters to have safety and environmental management systems like those required in the North Sea.  

Yup, the permitorium continues. 

Crazy Thinking -- From a Guy Who Didn't Pay His Full Share Until Caught -- Another Inconvenient Truth

Link here.

Treasury Secretary Tim Geithner says taxes on small business must increase, so big government doesn't shrink.

I can't make this stuff up.

Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”

North Dakota Flooding -- Garrison Dam, Depth, Inflow and Outflow; Minot Photos

Garrison Dam inflow, depth, and releases:

Source:  http://www.greatplainsexaminer.com/wp-content/uploads/2011/06/Missouri_River_Depth-for-web1.jpg

If I read the "squiggles" correctly, it looks like there is a new spike in the inflow of water into the Garrison Reservoir.

***********

Elsewhere: Minot flood photos.

It Doesn't Quit: The Announcement to Release Oil From Global Reserves Continues to Reverberate

It looks like oil closed at around $92 today, after it appeared to be in free fall after the announcement of global release of reserves.

"Anonymous" posted some time ago that if the Saudis say they could make up the shortfall, and then it turned out they couldn't, the price of oil would spike to new highs.

Well, when I see an announcement in the morning that oil from global reserves will be released, and then I see that oil, in the big scheme of things, held its own, it's a very, very bullish sign for the oil industry.

And this comes at a time when folks say the global economy is slowing. If the price of oil reverses direction and heads higher after the announcement to release global reserves, "Katie, bar the door."

WMB Makes Unsolicited Bid For SUG -- It's Goin' To Be A Huge 12 Months for the Oil Industry

Link here.

The Williams Cos. Inc. announced an unsolicited takeover bid of about $4.9 billion Thursday for pipeline company Southern Union Co., which agreed last week to a sale to Energy Transfer Equity LP.

Williams, which also operates gas pipelines, said it would offer $39 per share in cash and top Energy Transfer's bid of $33 per share, or $4.2 billion.

The announcement came after the markets closed and sent Southern Union shares higher after hours.

If the IEA thinks the oil situation is dire enough to release 60 million bbls from global strategic petroleum reserves, something tells me someone saw a huge shortage of oil coming down the pike. It's going to be a huge 12 months for the oil industry going forward. Despite the announcement, oil closes at $92 or thereabouts.

Five (5) New Permits -- Bakken, North Dakota, USA

Daily activity report, June 23, 2011 --

Drillers:  Burlington Resources, Petro-Hunt, Hess, Whiting, BEXP.

Fields: Haystack Butte, Nelson Bridge, Dollar Joe, Sanish, and Avoca.

Whiting has another permit in its cash cow, the Sanish.

Most interesting, I just did a long, stand-alone post on Glass Bluff oil field yesterday, which abuts the Avoca field, and now I see the first permit in a long time in Avoca, and it's a BEXP permit. Should be exciting.

Other wells reporting today:

• Fidelity had a disappointing (based on IP) Wock 14-11H with 193 bbls IP. (File #19275)
• Likewise, Hess had a disappointing RS-Nelson Farms A-156-90 2829H-3 in Mountrail County with 117 bbls IP. (File #18606)
• EOG had a great Round Prairie 10-1819H, with 1,458 bbls IP. (File #19478)

Yet Another Article: Saudis Can't Make Up Shortfall

Link here.

International Energy Agency Executive Director Nobuo Tanaka, making good on earlier threats, said the 28 IEA member countries have agreed to release 60 million bbl of oil in the coming month in response to the ongoing disruption of oil supplies from Libya.

“Today, for the third time in the history of the International Energy Agency, our member countries have decided to release stocks,” Tanaka said, adding, “I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy.”

IEA member countries have agreed to make 2 million b/d of oil available from their emergency stocks over an initial period of 30 days. IEA said it had been in “close consultation with major producing countries, as well as with key non-IEA importing countries” ahead of making this decision.

IEA expected that North America would release half of the total, with European countries releasing some 30%, and Asian countries, the remainder. IEA said it will produce a tally “once it has a clear indication of the types of oil that each country will make available.”

I thought "everyone" said the Saudis could make up any shortfall.

Here's the LA Times on the story:

The price of oil tumbled Thursday after the U.S. and other industrialized countries said they would release 60 million barrels of crude from their stockpiles in a bid to revive the flagging economic recovery by driving down painfully high energy prices.

"This is about addressing supply disruptions and their potential impact on global economic growth," a senior administration official told reporters on a conference call.

High oil prices, along with business disruptions created by the Japanese earthquake and tsunami, have battered the fragile recovery. Thursday's surprise announcement sent the price of crude sinking $4.31 to $91.10 a barrel in New York trading.

Although cheaper oil is considered a plus for the economy, the stock market didn't react well to the news, partly reflecting a disappointing report on jobless claims. The Dow Jones industrials dropped more than 200 points before rebounding. The index was down more than 110 points about 15 minutes before the closing bell.

The stockpiled oil, half of it to come from the U.S. government's Strategic Petroleum Reserve, is scheduled to be sold on the energy markets over the next 30 days, the Obama administration said Thursday.

On the other hand, Goldman Sachs thinks Libyan rebel forces could export 355,000 bbls/day.

Libya’s oil exports could rise by as much as 355,000 b/d from areas held by forces opposed to the rule of the country’s leader Moammar Gadhafi, according to an analyst report.

“The opposition forces could resume about 200,000 b/d of crude exports as some fields and their related export terminals are largely intact,” said the report by Goldman Sachs Group Inc. “A further 155,000 b/d could potentially be exported at a later stage from a second loading port under their control.”

The report said Libya’s oil exports could climb as high as 585,000 b/d if Gadhafi is removed from power and production resumes from western fields held by his government.

Something tells me the international community to release oil from the SPR is more than about the lost Libyan oil. 

One almost gets the feeling that bigger surprises are in store.

One non-surprise: I think some administration folks are thinking that the Libyan non-war could last a long, long time; that China's growth will exceed expectations and demand for oil; and, that Japan, will need more fossil fuels to replace the nuclear energy they've lost.

So Much For Those WhoThought Saudi Could Make Up The Shortfall

Link here.

Officials on Thursday pointed to the drawn out nature of the Libyan disruption as the driving force behind tapping the reserve. The IEA estimated that the unrest in Libya removed 132 million barrels of light, sweet crude oil from the market by the end of May.

But the total amount that will be released to ease supply troubles -- 60 million barrels -- is less than one day's worldwide oil consumption.

In March, Obama said his administration was not tapping the reserve because there was no supply shock and other countries would fill the production gap.

"Right now, what we're seeing is not a shortage of supply," Obama said, before adding that, "even if Libyan oil production was suspended for a significant period of time because of the unrest there, we'd be able to fill that gap."

Many analysts were expecting OPEC to increase production earlier this month in response to the Libyan shortfall, but a decision to do so could not be reached.

This is truly incredible. 

So much for all those folks who said Saudi wouldn't "bluff us."

Acts of Desperation: More Thoughts On The Release of Oil From Global Strategic Petroleum Reserves

Yesterday, Fed chairman Bernanke said he cannot explain the "soft patch" and he says US won't see growth until 2012.

So, what does the Obama administration do in response to those two inconvenient truths? The administration releases oil from the US strategic petroleum reserve.

The price of oil was already heading down. The Saudis said they would increase production and most suspected slow US economy would put a drag on oil consumption. That alone meant there was no reason for releasing oil.

President Obama will release 30 million bbls from the US strategic petroleum reserve. Saudi said they would increase production as much as 1 million bbls per day; thus, the SPR release equals what the Saudis could do in one month.  If the price of oil goes down much, OPEC can simply cut production. Releasing oil from the SPR for these reasons is a fool's game. Not only was it not needed, but when the US goes back to topping off the caverns, it will be buying oil at a (much?) higher price.

Not only that, cheaper oil means more pressure on renewable energy, particularly solar which was already in free fall. Cheap oil pretty much means the end of renewable energy. President Obama consistently said that renewable energy projects would result in more jobs. Cheaper oil leads to less interest in those renewable energy programs, and thus less jobs. (I'm only using the administration's assumption that renewable energy projects mean more jobs. I don't buy into that argument, but that discussion can be held another day.)

I assume the decision to release oil was an attempt to stimulate the economy, to help folks who are pinched at the pump. But Obama himself has said every $10 increase in oil translates to only 25 cents per gallon at the pump. Thus, at most we will see is gasoline going from $4.00 to $3.75 per gallon which, one can argue, doesn't mean a whole lot for the average consumer, except perhaps psychological. I have to admit: I prefer $3.75 on the marquee rather than $4.05. But on a 20-gallon fill-up, that's a savings of $6.00 ($81 vs $75) -- not much of a difference. I guess if one fills up five times a month, that's a savings of $30 a month. Hmmm.

I doubt the opening of the SPR will have much near term effect on oil exploration and production, but if there is any effect, it will slow down CAPEX, stifling the domestic oil industry, the sector that leads all others in terms of jobs. [Speaking of jobs: several hours after putting up this post, I ran across this article -- jobless claims up to 429,000 -- disappointing.

Initial claims for state unemployment benefits climbed 9,000 to 429,000, the Labor Department said Thursday.

Economists had expected claims to come in at 415,000. 

The report was the latest in a long-running series of data to underscore the lingering weakness in the U.S. recovery and came a day after the Federal Reserve gave a gloomier assessment of the economy.]

To me, the administration's decision to release oil from the SPR at this point was an act of desperation. They need to improve the job picture. Ironically, the combination of Bernanke's remarks and the SPR decision has spooked the market, dropping almost 300 points after the announcement. Companies are not going to be hiring when tbe market is this spooked, when the debt ceiling negotiations appear to have come to a standstill, and when the Fed chairman says there will be no growth until 2012.

But there's more to the story.

The decision to release oil from the SPR did not occur overnight. This must have been debated for quite some time before the decision was announced. My hunch is that the White House was as surprised as the rest of us with Bernanke's brutal honesty: no growth until 2012. The coincidental timing of Bernanke's remarks and the announcement to release oil from the SPR worked at cross purposes. If there is to be no growth until 2012, the price of oil would have fallen on its own, and, in fact, the price of oil had already begun to fall.

Bernanke cannot explain the "soft patch," the world was awash in oil (for the near term), no growth is executed until 2012 which means less demand for oil, and yet the president releases more oil on the market, which at best will drop the price of oil to $3.75 from $4.00 per gallon. I think President Obama blew the timing on this and he blew it spectacularly.

There have been several stories in the past two days of President Obama overriding the recommendations or opinions of his lawyers and generals. Yesterday, polls showed a significant drop in support for Obama. In another poll, only three of every ten folks asked, plan to vote for Obama in 2012.

These are acts of a desperate man:

• Withdrawing troops from Afghanistan early for political reasons, negotiating with the Taliban to fill the void
• Releasing oil from the SPR for political reasons, against all common sense
• Overriding his own lawyers, arguing the US is not participating in hostilities over Libya and possibly even on the ground (it's hard for me to believe we don't have covert forces, or at least advisers, on the ground in North Africa

If House republicans see this the way I do, that the president appears to be acting as a desperate man, they won't budge on negotiations with regard to the debt ceiling. Cooler heads will prevail, I hope, and the US won't default, but it's going to be an interesting summer. [Update: about two hours after posting this, I see that the GOP has walked out on debt ceiling talks.]

As for me, I'm going to keep buying shares in oil companies and oil services but limit my buying to well-financed blue chip international companies and one or two of the bigger Bakken companies as well as one or two smaller Bakken companies that might become takeover targets. The risk, of course, is that the small Bakken companies, to execute their CAPEX programs may have to raise cash by issuing more shares.

My understanding is that the earth's population is soon to be growing the equivalent of a one-million-person city every week. That's a lot of internal combustion engines.

There is neither space enough nor time enough to continue the discussion in the comment section.

Initial Thoughts on the Release of Oil From the Strategic Petroleum Reserves

There are so many nuances to the story surrounding Obama's decision to release thirty million bbls of oil from the US Strategic Petroleum Reserve. (I understand worldwide 60 million bbls of oil will be released.)

This is but one more nuance to consider, useful for those attending a cocktail party tonight, or perhaps a political fundraiser.

First, "everyone" agrees the world is awash in oil. The $100/bbl is due to the weak dollar; it is not due to the fundamentals of the commodity, i.e., supply and demand.

The supply addition comes at a time when refiners in the world’s biggest economy have more crude on hand and are importing less as demand for fuels such as gasoline and diesel is slipping, according to Energy Department figures. 

Second, "everyone" agrees the US economy is slowing down; all agree we are in a "soft patch." the only argument is whether we are headed for a double-dip recession.

Third, Saudi says they will increase production, and, further, they say they can cover any shortfall and provide the market with however much oil is needed.

Now, why in the world, would a president release oil from a STRATEGIC reserve if there is no shortage, if there will soon be a further slowing of global demand for oil, and, if Saudi says they can and they will increase production to meet any shortfall?

The real reason is that the polls suggested to Obama he was falling fast in popularity and had to do something momentous.

Of the three "facts" presented above, I doubt anyone can seriously deny the first two. It's that third one that should catch the analysts' attention. Releasing oil from our STRATEGIC reserves suggests the administration knows that the Saudis cannot or will not produce enough oil to meet current global demand. That should be a huge wake-up call for those who buy into the Saudis' statement they can and they will produce enough oil to meet demand, or at least any shortfall caused by conflicts in the Middle East.

I've never believed the Saudis on that issue, analysts writing for Forbes magazine don't believe the Saudis, and, now, apparently neither does the president.

There is neither space enough nor time enough to further the discussion in the comment section.