Monday, July 7, 2014
Do US Strategic Petroleum Reserves Actually Exist?
Do US Strategic Petroleum Reserves Actually Exist? Lex Loeb Contributor Network . This inquiry is not about forcing the government to start pumping out strategic oil reserves but is about the possibility that such reserves may not actually exist. It is true that raw petroleum can be stored and does not degrade. It is true that the oil reserve centers can be found on a map along the gulf of Mexico. Have you ever heard of oil being pumped out to any large degree? NO. It is possible that the strategic oil reserves are a giant bluff. Figures of a trillion barrels stored appear in the media from time to time. The present world oil price supply demand imbalance causing prices to surge to over 140 dollars per barrel is just a million barrels of oil. So if the strategic oil reserves actually exist than why does president Bush go off to Saudi Arabia to demand that they put more oil on the world markets? The strategic oil reserves can be sold at very high prices now if they exist and certainly replaced at lower prices if they actually exist. Maybe the government is waiting till prices hit 200 or more dollars per barrel? The real question is if any of that reserve oil actually exists? Questions arise about Fort Knox Gold if it even exists anymore? The government is it's own auditor. Right now there is little doubt in my mind that if the strategic oil reserves do exist that the government can sell oil and use the funds to buy oil companies producing more oil or start start drilling for more. That is why I am skeptical. I remember when the stupid Bank of England was selling its gold reserves when the price was at market lows. That made no sense at all and was a bit of a catastrophe in hindsight to say the least. That is exactly what it appears the US Gov is doing now with idle oil sitting in holes in the ground if the strategic supply actually exists. Not putting it on the market at these prices NOW, or at least some of it is more foolish than ever at this point. It only makes me more and more suspicious it does not exist or someone is secretly pilfering it. I would not doubt that someone might even be horizontally drilling into the supply and stealing it if it exists at these prices. Just look at what me th addicts will do to get scrap metal to imagine what is possible. The senators in congress are pushing to "release" the oil from the reserve like some big give away--that is all nonsense. The government paid $10 a barrel for a lot of the reserves if they are there and they are still willing to sit on those supplies? It is beyond stupid to leave most of that oil where it is under the circumstances so long as the gov buys contracts to cover the use of supply and oil company shares that will continue producing oil or sell Rights to drill for a royalty paid in oil. I know government officials and elected officials are generally stupid but this is absurdly stupid because by the time they figure out what to do with the strategic supply the opportunity costs will be too high. This is now the time to tap the strategic supplies in a big way and to hedge their bets taking oil in exchange for royalties on federal land drilling. The only reason The Federal Reserve and the US Treasury may not have hit on the obvious is because the oil may not actually exist? We see what governments are doing with reserves in big oil producing countries. it is doing anything but harming their financial condition selling oil at top prices so why is the US Government holding back? Are they selling already or just completely stupid? The government sells itself to the public as taking care of us when they can't even figure out how to take care of themselves or maybe someone is taking care of themselves and there is no oil in the strategic supply reserves. Right now it is possible for the US government to contract with someone like George Soros to hedge the position and make appropriate sales with no risk of loosing money or oil. But first the oil has to actually be there. If the government paid an average of 15 dollars a barrel for the supplies than selling at 100 a barrel is not so bad for them. The government does not pay taxes on cap gains and since it creates inflation they can certainly use oil as monetary tool if they like. It is time the government produce the oil and prove it exists selling contracts or hedge contracts now when the price is such an outstanding value for their net worth accounts.