That's the problem that I was having. I just couldn't get past the short-term thinking behind releasing 1/3 of the SPR. The numbers don't work.

The current SPR inventory is 705.9 million bbls. IF we were to release 1/3 of the reserve, that would be 235.3 million bbls. Now, all of that oil would not come flooding into the market all at once. The maximum total withdrawal capability from the SPR is only 4.4 million barrels per day. That would only offset about 36% of the 12 million bbls. of oil that we import daily.

So, we may have some short-term relief for the 54 days it would take to release that oil into the market. However, during that time we would also need to start spending money to replace/replenish the oil in the reserve. Iin two months we are back to where we started.

Rick:

The suggestion of raising the margin requirements for investors/speculators on oil futures contracts is a good idea, IMO.

I think only around 7% cash is required now.

I also agree that such contracts are important to businesses; look no further than Southwest Airlines' now very wise forward bets on fuel.

I am surprised that this thread meandered away from it's intended topic. :D

Newt's reasons for tapping into the SPR have nothing to do with wanting to give Americans a quick-fix, but rather put a hard stop to the speculation, which is driving up prices every day. I know the result would probably be the same, but I can accept Newt's reasoning a lot better than I can just throwing a bone to folks who think the gov't. should give us short-term relief, putting the real pain off until later.

Besides, refilling the SPR would cost a lot more in the future than the oil released cost originally. Only the government would think of selling something for less than the cost to replace it. Not a good idea.

Exactly, real men don't commit perjury and obstruction of justice. When you lie and obfuscate, some people become curious about it. You can get mad at Ken Starr for being overzealous I suppose, but what is Mr Gingrich supposed to do with it?

Not bad ideas, don't like the monkeying around with strategic petroleum reserve much.

My dad declined the position of Mr Gingrich's chief of staff when he ran for Congress.

The speculaltion would just be delayed to October futures. Delayed gratification, but much sweeter.

Yes, but only if we continued to do absolutely nothing about increasing supply and lowering demand in the meantime. And I'm not saying that's not exactly what would happen.

Makes perfect sense to me so I wrote my congressmen and asked them to push for flooding the market with oil from the strategic reserve to punish the speculators. I even forwarded Newt's speech.
Even if it doesn't happen it will tell the speculators that their posistion is on shaky ground and they will back off. if they played by the rules I wouldn't condone government meddling but IMO wall street has done everything but play by the rules and deserves a bit of a spanking.

We are always buying oil to put into the reserve. Even when it's at $140 a barrel.
If the government offers up several billion barrels or so for sale. they will only have to actually sell a few hundred million barrels, and even then at probably a higher price than they originally paid for it. Suppose they bought it at an average price of $40 a barrel, which is probably pretty close. They can offer it up for sale and get $120 at first, then $100, then $90 and so on. We already have access to all the oil we need so they wouldn't have to sell very much to affect the market. After the price gets back down to reasonable they withdraw the remaining sale offers.
They replace it with oil bought at around $70 which is where it should be. They make enough money on the equity of the oil they sell that they can slowly replace the oil and still be financially ahead, as long as the speculators are kept in check.

You guys really think that drilling for oil will reduce the price of gasoline? This is sort of an intelligence test, in a way.

That is my way of thinking too. IMO, the "threat" will have more impact on the speculators (Bob as I like to call them - "Bush's oil buddies" :)) who have ridden this administration to untold wealth at the expense of the American people. The actual impact upon supply is not as significant as the threat of a release. I still recall (back when oil was around $60) when of Bush's top guys (forget his name) stated the the price of a barrel was really irrelevant upon the economy...total bs, but it sure set the climate for what has happened since imo.

Yes, let's find out who believes in that whole Supply/Demand nonsense. :rolleyes:

C'mon Supe. You're smarter than that.

From some conservative blog...
http://rightsideva.blogspot.com/2007/11/hillarys-strategic-energy-plansolution.html

Potential Democratic Party presidential nominee and possible(?) 44th President of the United States Hillary Clinton called on actual President Bush to release oil from the strategic reserve to “ease concerns about low crude stocks”.
"I urge the President to release oil from the Strategic Petroleum Reserve and the Northeast Heating Oil Reserve to send a signal to the market and ease concerns about low crude oil stocks that are driving prices higher,"
Unfortunately it appears the possible(?) next President does not understand that the reason for the strategic reserve is to provide valuable crude during major supply disruptions and would rather use it to get valuable votes for a primary election. Like her Hubby and prior co-president “Slick Willie”, Hillary would use our strategic reserves to appear she is providing relief to Americans who are paying high fuel prices when in fact she is ignoring the real problem.
“Former President Bill Clinton ordered the release of up to 30 million barrels from the crude oil reserve in September 2000 to boost available heating fuel supplies heading into the winter.”

Like I said, there is already enough oil to go around. Having excess creates a bidding war with the buyers having the advantage. that lowers the price.
Imagine you are selling some product on e-bay and getting $100 for it. next thing you know, 4 other guys are selling the exact same thing. Ending bid price is going to go lower.

just the threat of a big additional excess inventory being available would probably be enough to chase away the vulture speculators and send the price back down to $70 or $75 where it belongs. They played with gold last year and tripled it's price, this year it's oil, I say it's time to send them onto some commodity that doesn't kill our economy. We can't maintain the current quality of life with oil getting as expensive as it is and the price just isn't justified by the fundamentals. Or burn their greedy butts and send them to the poor house. That would work too.

In case anyone has forgotten, In 1998 the price of crude oil was $18 per barrel and gas was well under $2 a gallon.

Other affairs aside here, Newt is saying what needs to happen. Period.

Rick, hung out like , had a couple of beers with him ?? Very cool!!!
this country really needs a hero like he was last time he made the "contract with America"

Back in the Republican Revolution days, I worked at the RNC and Newt was often the star at a lot of fundraisers. A few times I had to sort of escort him around and show him where to go. For a guy as busy as he was in those days, he always made it a point to stick around and pose for photos with staff once he was done with official duties. I also got him to sign his book for my dad. If I weren't so lazy, I'd scan some of the 8x10's I have of us together. He really was a cool guy to staffers. Best time was after a giant fundraiser when they closed down the back room of the Capital Grille for all of us. Newt and Haley Barbour, John Boehner, John Kasich, Tom DeLay, the whole crew, hung out smoking cigars and downing Maker's Mark with just the staffers. Very cool time. I swear, there were days when I was at an event with Newt until midnight, saw him on CNN in the morning while I was getting ready for work and then ran into him at the office when I got to work. The guy was like Clinton in that he never slept.