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Calls Mount to Tap U.S. Oil Reserves
John M. Broder and Clifford Krauss, New York Times
As oil prices have risen in recent weeks, calls have been growing in Congress for the Obama administration to consider tapping into the nation’s strategic petroleum reserve, which is now at its full capacity of 727 million barrels.
… But the administration has so far resisted these calls, saying that excess oil production capacity around the world remains well above the amount of oil whose flow has been disrupted by unrest in Libya and elsewhere in the Middle East. Officials said that opening the spigot on the strategic reserve would send precisely the wrong signal to domestic consumers and international oil markets at a time when gasoline prices have risen only modestly and oil supplies are not yet severely strained.
Steven Chu, the energy secretary, said in an interview that the administration was closely monitoring the situation but warned against an overreaction to recent increases in oil prices.
“We don’t want to be totally reactive so that when the price goes up everybody panics and when it goes back down everybody goes back to sleep,” he said, echoing Mr. Obama’s description of the American public’s response to oil prices as alternating between shock and trance.
(3 March 2011)
White House considers tapping oil reserves
Jackie Frank, Reuters
White House Chief of Staff Bill Daley said on Sunday the Obama administration is considering tapping into the U.S. strategic oil reserve as one way to help ease soaring oil prices.
… Treasury Secretary Timothy Geithner said on Thursday the United States and other major economies could tap strategic reserves to keep oil prices from derailing a global recovery.
(6 March 2011)
Crude Oil Heads for Its Third Weekly Gain as Unrest Spreads to Middle East
Ben Sharples and Ann Koh, Bloomberg
Oil rose, heading for a third weekly gain, as unrest in Libya renewed concern supply disruptions may spread to the Middle East while signs of U.S. economic recovery stoked speculation fuel demand will increase.
Futures are 5 percent higher this week, after surging to the highest in 29 months, as Libyan forces loyal to Muammar Qaddafi continued attacks on rebels and protests spread to Iran and Oman
(4 March 2011)
Related from AP (via TIME): Oil Hits Highest Price Since September 2008. -BA
Oil no immediate threat to recovery
Current market fundamentals said to differ from those of 2008
RENÉ VOLLGRAAFF, Times Live (S. Africa)
The sharp jump in the oil price due to political upheaval in North Africa and the Middle East does not pose an immediate risk to ongoing world economic recovery.
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The price of Brent crude oil has risen more than 21% since the start of this year and was trading just above $115/barrel on Friday.
This has led to fears of rapidly rising food prices and another global economic downturn as prices seem to be heading for 2008 levels, which contributed to the worldwide economic recession.
According to James Zhang, a commodity strategist at Standard Bank in London, most of the recent price rally has been due to the political unrest in countries in North Africa and the Middle East.
In a way one can argue that the increase is justified as the whole region produces more than 30% of global oil supply, Zhang says.
But apart from the political situation, the current market fundamentals differ a lot from those in 2008, when the oil price peaked at $145, he says.
… While supply problems have contributed to the rise in crude oil prices since the start of this year, questions on how long the world can keep on pumping more oil arose once more.
Geophysicist Marion King Hubbert coined the “peak oil theory” in the mid-1900s, claiming that oil production follows a bell-shaped curve.
That means because oil is a non-replenishing resource, there is a limit to how much the world can extract. “Peak oil” is the idea that one day oil production will reach a maximum and will start to decline until full depletion is ultimately reached.
But Duncan Clarke, CEO of Global Pacific & Partners, whose book The Battle for Barrels explores the subject, said the world is not running out of oil supply or reserves.
More discoveries are being made continually and more producers are entering the market, he said.
“In a general sense the model of peak oil is highly restrictive and parameterised,” he said.
“The peak oil cult is a sort of lobby and also plays into the anti-hydro carbon initiatives we see around the world and all sorts of pseudo-green energy strategies and policies, part of which link back into climate change.”
(5 March 2011)
