How to Use the Strategic Petroleum Reserve

I just finished writing an article on that:

Stop Filling the SPR?

The truth is, the rate of fill is about 0.05% of the world's daily oil consumption. That's just noise. You could save more oil by simply having full-service gas stations check the air pressure of the tires on every car that stops by - yet I don't see anyone calling for that.

My conclusion is that since it is already almost full, yet the fill rate is so slow, it really isn't going to make any difference either way. But the suckers who want to sell oil from the SPR at current prices obviously think oil prices long-term are going down. Let them bet their own money on that.

You could save more oil by simply having full-service gas stations check the air pressure of the tires on every car that stops by - yet I don't see anyone calling for that.

Probably because there aren't any full service stations. Except in New Jersey and other places where they are mandated by law.

Honestly, I haven't seen a full-service station for years.

There are a few places. I think that's the law in Oregon as well, and I have run into it at places in Europe.

But, even without that, there could be a campaign reminding people to check the air when they fill up, while making air hoses available at the pumps (instead of tucked off in a corner).

Here in Ontario media coverage of fuel prices is now a daily feature. Most of the local TV coverage regularily includes tips on how to save and tire pressure is always included as well as driving style tips. However whenever I visit Canadian Tire stores invariably the housewares and do-dads sections are the busiest with very little traffic in the automotive sections. I think a lot of people don't even know the car has tires, let alone that there is air in them.

Charity groups could check the air pressure for a free-will donation. Like some of them do with car washes.

Hey, I was about to post that! Yes, it would be a lot easier than washing cars and could even be done by old farts like me.

That will never happen. It requires gas station owners to invest in new infrastructure, when a lot of them are hurting from the high prices worse than their customers.

Besides, checking tire pressure is best done before you start driving, not at the gas station when you may have been driving for awhile.

What do you think of the WSJ's idea that we should sell oil from the SPR?

It requires gas station owners to invest in new infrastructure...

I think most of them already have the compressors. It's a matter of education and access.

What do you think of the WSJ's idea that we should sell oil from the SPR?

It's kind of like running without insurance. It's a great way to save money - provided I don't have an accident.

If one had some kind of knowledge that oil would definitely be lower in the future - and the guy advocating that clearly felt that way - then it would make sense. But if you think oil is going much higher, then it would be stupid. Remember, people have been calling for the SPR to be tapped since oil hit $20. Imagine the situation we would be in now - $120 oil and an empty SPR - if those calls had been heeded.

I think most of them already have the compressors. It's a matter of education and access.

They have the compressors, but as you note, there's usually one, off in a corner, away from the pumps. Having them at the pump, as you suggest, would force stations to have more than one.

It's kind of like running without insurance. It's a great way to save money - provided I don't have an accident.

Yeah, but the non-peak oil aware won't really care about that. They just want to know if it will work. (And note they are in favor of maintaining a certain minimum level in the SPR, so we'd never be entirely without insurance.)

And we'd be able to fill up again, once oil drops below $40/barrel!

I think that we need the SPR. Remember New Orleans after the flood. A major city without gasoline will look the same in a few days.

Remember, people have been calling for the SPR to be tapped since oil hit $20. Imagine the situation we would be in now - $120 oil and an empty SPR - if those calls had been heeded.

That's really the perfect comeback for people like us to use. Of course, the government can't use it lest it cause panic. This administration probably even has reason to think oil could soon spike, and they can't say that either.

It's the strategic reserve, not the "cheapskate" reserve anyhow.

Maybe our fine President *knows* there will be a problem with oil supply in the near future...

Like when we invade Iran?

In which case the reserve would probably be used to make fuel for military vehicles and aircraft. In the event of an attack on Iran, fuel shortages would last a lot longer then 90 days, and the US military is one of the world's largest users of oil...during WWII, people didn't drive unless they got the right permit...everyone else walked or took a bus.

As I see it, the SPR isn't there so we can keep driving to the Dairy Queen in our SUVs -- it's there for the military, and emergency services, and health care, in the event of a national crisis. I don't think selling oil out of the SPR would make much of a difference in oil prices -- we here in the U.S. are no longer driving the bus, when it comes to global oil demand and consumption.

The DOE wants to do this with the SPR:

/

To decrease the cost of filling the reserve and improve its efficiency, GAO recommended in previous work that DOE should include at least 10 percent heavy crude oils in the SPR. If DOE bought 100 million barrels of heavy crude oil during its expansion of the SPR it could save over $1 billion in nominal terms, assuming a price differential of $12 between the price of light crude oil and the lower price of heavy crude oil, the average differential over the last five years. Having heavy crude oil in the SPR would also make the SPR more compatible with many U.S. refineries, helping these refineries run more efficiently in the event that a supply disruption triggers use of the SPR.

Iran has 20 million barrels of heavy oil in storage in tankers. I suspect that they would be willing to make a one time deal at a good price (payable in euros through Swiss bank). This would effectively fill our SPR (701.x to 721.x million barrels) and allow us to bomb them.

Best Hopes for Rational Behavior :-(

Alan

Around South Florida even 'free air' regardless of where it is located is scarce. Most self serves with "convenience" stores have the air and water off to the side AND for seventy-five cents!

Pete

Not only are tucked off in a corner, but they are usually coin operated. Last week I needed one because of a slow leak, I had to ask at the pay counter. At least they turned it on for me for free, as I am a frequent customer. Otherwise the machine wanted $.75 for the honor of using it.

Wow, I never heard of such a thing. I thought you always had to pay. It would never even occur to me to ask to use it free.

Why don't we just use handpumps? I have a $7.50 pump I bought a few years back, and a nice round airpressure gauge. You should always have both in your car at all times, anyway! It ain't THAT hard!

I purchased emergency gizmos for both our cars that will inflate a tire and run off the car battery. They also have a built-in flashlight and warning flashers. They cost about $20, I think (made in China, of course). I've been looking for a manual foot pump, but I haven't found one yet (admittedly, I haven't been looking very hard or in the right places yet).

I've been looking for a manual foot pump,

Visit any bike sections in a tarket/kmart/mal-wart big box store. Downside - they are flimsy.

At least in California, state law now requires gas stations to provide free air to customers. If they have a pay machine you can ask the clerk and he'll give you a token or a quarter. The law was passed a year or two ago to encourage energy efficiency and safety.

You find full service throughout Oregon. The law says you can't pump your own gas.

On the other hand, perhaps we should take some responsibility here and do the checking of tire pressure ourselves?

I covered this in another article I recently wrote. In that essay, I posted the following excerpts from a recent story on Yahoo:

The Carnegie Mellon University Sustainable Earth Club studied 81 random vehicles in a parking lot and found that 80 of the 81 had under-inflated tires. The average rate of under-inflation was 20% -- soft tires, indeed.

The EPA estimates that for every 1 psi of under-inflation, fuel economy drops by 0.4%. That's not much, but if the tires are under-inflated by 8 pounds, that's a 3.2% drop in fuel economy. About 1.2 billion gallons of fuel are wasted annually due to under-inflated tires, the NHTSA estimated in 2005.

1.2 billion gallons is three times what we put in the SPR in the past year - but have you heard one government official talking about an intiative to air up our tires?

I'd be interested to know when that study was done. It can be difficult to keep tires at the right pressure when the seasons are changing. In April and May around here, it's not unusual for it be 90F one day and 30F the next.

And yes, I've heard government officials talking about tire pressure. They even passed a law about it.

And yes, I've heard government officials talking about tire pressure. They even passed a law about it.

That's a new one on me. Can someone confirm that the 2008s have these sensors?

My daughter's 2007 Toyota Pruis has the tire pressure lights.

Appearantly the federal government has passed
legislation
that mandates TPMS (tire pressure monitoring system) on every vehicle under 10,000 lbs GVWR starting September 2007 relating to Firestone and other tire safety issue.

Some flap about tampering and installing custom wheels.

The cheap and dirty way to do this has always been to count 'triggers' of the ABS sensors and alert when one tire turned in too many revolutions over it's counterparts. The problem here was it took the brain awhile to decide if it was really happening. Don't know if the new law mandates the smart in-the-wheel variety, (which address the fuel mileage issue more directly rather than just safety) probably not.

We just got in new Chevys. The Impala I drove read out each tire pressure as I drove, along with the running instantaneous gas mileage.

Hi Robert,

I have a tendency to overinflate my tires in an effort to improve fuel economy and over the years I'm reasonably sure I've blown at least two as a result. The tire pressure monitoring system on my car shows the real-time pressure of all four, in kiloPascals or psi, as well as the condition of the spare. If one or more tires fall out of range, it flashes a warning and the readings of affected tire(s) blink on the display. This system has been triggered several times in the six years I've owned this vehicle, typically when the weather turns sharply warmer or in extended high-speed driving. For me, it offers considerable peace of mind, added convenience and greater safety, plus it has protected me from expensive loss (you don't want to replace a P255/45ZR-18 before its time and/or an alloy rim if you can possibly avoid it). If this isn't standard equipment on all vehicles, it really should be -- that and side-impact air bags.

Cheers,
Paul

Over or under inflated tires suffer enhanced, and uneven wear. The cost to the motorist of premature replacement can be considerable.

Hi EoS,

That's true. In years past, I use to fill my tires to their maximum rating specified by the tyre manufacturer but, as you know, 35 psi at -20C is altogether different at +20C. In Atlantic Canada, temperatures can swing from one extreme to the other all in the same week, so what's perfectly fine one day can be potentially disastrous the next. The TPMS has made me much more aware of this fact and taught me not to push the boundaries quite as hard. Now, I don't worry about day-to-day changes in my vehicle's tire pressure for the simple fact that my car monitors it for me.

Cheers,
Paul

Our 2006 Prius has the sensors. They aren't very accurate, however (at least in the '06 models). They are useful to warn of impending problems, not to make sure they're filled to optimum pressure.

Leanan -

The effect of these day-to-day temperature fluctuations on tire pressure tend to average out, but on the whole I think it is safe to conclude that most cars have underinflated tires - simply because there are inherent very slow leaks coupled with the fact that most motorists tend to ignore tire pressure. Also, remember that it is the differences in absolute temperature that determines pressure differences, so the difference in pressure resulting from a drop in temperature from 90F to 30F is not as great as it would at first appear.

If you check you tire pressure once a month, you should be pretty close to maintaining the proper pressure most of the time. It is very important to be extra diligent about this at the onset of Winter.

I personally find using a service station air hose both inconvenient and slightly dangerous (almost got run over by a car pulling out while bending over putting air in a tire), so I bought a nice little air pump ($49 at Peb Boys) and do it myself. It's probably already paid for itself.

I became a little compulsive about tire pressure as the result of having owned two rear-engined cars, a '66 Corvair and a '68 Beetle. The handling of a rear-engined car is extremely sensitive to front-to-rear relative tire pressure, so neglecting tire pressure with such cars is at one's peril.

I have a little air pump, too. It was $80 at Brookstone. You plug it into the cigarette lighter.

The only problem is people aren't used to seeing you inflate your own tires like that. Whenever I use it, some guy comes rushing out to help me, thinking I'm trying to change a flat.

Is the manufacturer's recommended tire pressure designed to optimize fuel consumption, or safety? I'm guessing the latter. Is there any reason the two optima should be the same? I'm guessing not.

One tire salesman recommended a lower pressure than that printed on the tire to make the ride "smoother." I wasn't that impressed. I've also found it entirely possible to pump up car tires with a bicycle pump. If you have one with an integral pressure gauge, it's pretty easy if a little phycically demanding.

Manufacturers set their tire pressure based on optimum feel and handling characteristics based upon the demographics for that particular model. A performance car would have less highly inflated tires for better traction. A luxury car would have even soft tires for comfort, etc. Tire manufacturer's print the tire safety range on their tires. You can be sure that this range is designed for maximum protection from lawsuits, so I would guess that the range is actually wider than that posted on the sidewall. I pressure my tires at the absolute high end for maximum MPG. I also have never noticed any difference in handling characteristics related to safety or performance. The only change is the ride is a bit harsher.

There is an optimal tire pressure for safety: flat. A moving car is a dangerous car. Get out and walk. Impacts tend to do less damage.

Excessive tire pressure can cause greater wear in the center of the tire. (Internal construction figures in as well).

Also observe the front/rear pressure delta, and likely exaggerate it a bit if running higher pressures.

Best Hopes for Energy Efficiency and Properly Inflated tires,

Alan

I pressure my tires at the absolute high end for maximum MPG

Interesting, thanks guys. I remember reading a recommendation to overinflate by about 2psi to save fuel, and I hadn't thought of the third figure of merit - ride comfort. Tire life would be a fourth figure of merit (again with a sharp optimum at zero pressure, if you didn't try to ride the rims).

I'm sure the optimum for all of these is (a) very noisy and (b) somewhat broad. And tradeoffs make life much more interesting.

Lowering pressure REDUCES traction. Raising the pressure too high will distort the tread, leading to excessive wear in the middle. The proper setting is not what is written on the sidewall, but what is printed on the label on the car. It is best not to exceed the correct pressure for your car by too much - I usually run about 3-4psi over the rating on the car.

Les Schwab Tires, an institution here in the Northwest, routinely fills tires about 4 psi over manufacturer suggestion. I've followed that practice in checking my own tire pressure.

Leanan,
I have the same kind of little pump, a Coleman Compressor. Works well. Only $13.

http://www.collectionsetc.com/Item14202.aspx

I have long had a compressor, and just picked up another one for my wife last weekend at Checker Auto, complete with hoses and tire-filler nozzle, for $39 after rebate.

Not only are compressors darned easy to use, and not only is it best to fill your tires when they're cold, but if you have a larger air tank you can store some compressed air for running various tools. This is a fairly inexpensive alternative to battery storage of small amounts of energy, and air tools are pretty cheap. Now, anyhow.

Robert Rapier writes "The Carnegie Mellon University Sustainable Earth Club studied 81 random vehicles in a parking lot and found that 80 of the 81 had under-inflated tires. The average rate of under-inflation was 20% -- soft tires, indeed."

Determining the correct tire pressure may not be so easy. For the 81 vehicles sampled the researchers may not have to correct pressure to start with. Why? The manufacturer's recommendation for tire pressure may be different than the one on the tire. On my Ford Ranger the max pressure is 35 PSI under a particular load. Ford recommends 30 PSI.

Following on to Ammond, the tire pressure listed on the sidewall of the tire is the maximum pressure that the tire is designed to withstand. My experience is that the best-handling pressure (on a typical public road) and best tire-wear pressure is significantly below this level.

There is also a manufacture's recommended pressure, and in the case of my car at least, a (higher) recommended pressure for when traveling with maximum weight or at high speed. Of course the manufacturer's recommendations assume you are running the exact same tire and suspension setup that came with the car... hard to do when 10-year-old tire designs and shock designs that are no longer available for purchase.

So, I have a hard time believing 80 out of 81 sampled cars were truly under-inflated.

I would definitely believe that nearly all cars on the road have underinflated tires. Its the same with bicycles, and with bicycles you can really feel the difference when you pedal.

My old girlfriend had just gotten a nice Audi and I asked her if she had checked the tire pressure because they looked a little low. They were all between 18-24 psi with a recommended maximum of 36psi. I brought them all up to 33psi. So she was wasting quite a bit of fuel. I basically gave her the McCain/Clinton gas tax holiday+. I also gave her a pressure gauge and showed her how to use it. Not too sexy, but very practical.

The best handling may be with slightly flat tires, but aren't we talking about an energy crisis here? Isn't there a war for the oil in more than one place around the globe? And people can't be bothered to check their tires once a month? Yikes! The difference in handling is pretty marginal, and if you take the corner to fast you risk a blowout regardless. Most tires are not designed with race car handling in mind. Cars get you from point a to b. Anything extra is a bonus.

I still think Americans won't really change their driving habits until gas is $10/gal. That's the point at which the tax discounts from the McMansion in suburbia no longer offset the car that gets you there. Its also about the point where gas is the main factor in the Total Cost of Ownership (TCO) of the car. Right now gas is still just a small part compared to depreciation, insurance, repairs, parking, registration and tickets. $4/gal is a bargain. I know it sounds crazy, but it really is. It is about $0.20/mile marginal cost. People still go to Starbucks and get a mostly air coffee for $4 (plus the cost to drive there) every morning.

When people cut the Starbucks, that'll be the Canary in the Coalmine for the love affair of the automobile.

I agree that most tires are under inflated due to users lack of caring. I am a Honda mechanic and I check tire pressures all day long, a majority of them are at least 4psi low. I usually inflate at least 2psi higher than factory recommended and sometimes up to 5psi more. This comes from learning what each model does to the tires, and knowing the cust. will not check them. I also can see that the factory pressure has ride comfort as one of the factors. For instance after two years of a new model the recommended pressures on the same exact tire was raised by 3psi rear and 2psi front, due to excessive tire wear when the(Element) was close to GVWR(four 180lbs adults puts it within 60lbs of it).

One thing that bothers me the most is when a hybrid comes in the shop for a major service and it has 20psi in the tires. The average fuel mileage is very low on these cars. So they care enough about their car to spent over 300 dollars for service but cannot check the tire pressures once a month for free!

As an avid autocrosser I can tell you, handling is best with the tire pressures at the optimum level, sometimes lower but mostly higher than factory recommended pressures. Driving for fuel mileage does not always mean driving like grandma. Going through a corner faster means that you slowed down less and will have to speed up less, hence using less fuel, of course safety comes first, but just five psi low and the ultimate grip level is lowered. Most people only find the limit of traction when they are in an emergency situation, hence unless you sometimes drive your car near the limit and can feel the lowered traction of improperly inflated tires I recommend you keep the tire at or higher than factory specs.

John

Exactly.

Buy a twenty dollar pump that works off the cigarette lighter.

Dont tell me that, after years of Peak Oil Watching, drivers coming to this site have not got:

Pump , manual or electric
Jump leads or a 'heart starter'
Jerry can.

Be like the boy scouts :-)

Do you find French philosophers unbearably wordy? I've got a device that can summarize them a dozen at a time! It's true - it's called a Twelve Voltaire compressor!

(Can't remember where I read that)

Leanan-

To call NJ stations full-service is a laugh. It only means an attendant fills your tank instead of you -- nothing more! At least that's how it is here in Jersey City.

Yep--In Oregon, "Mini Service" is where they simply pump the fuel for you and maybe wash your windscreen. "Full Service" is where more is done, like checking oil level and tire pressure. These distinctions, however, are a bit fuzzy between stations due to competition for customers.

-best,

Wolf

Tire pressure and temperature monitors on my trucks show a 10-15 lb increase
after being driven for 30 minutes regardless of initial temperature. We never
over pressure out tires for this one reason.

When I rode a BMW, the mechanic that worked on my bike (also a superbike national champion) suggested that tire pressure should change 10% from cold (unridden) to warm (ridden a good distance, such as 10 miles). Admittedly, these were motorcycle tires, but if the change was more or less, then the tire was over/under inflated.

Almost all of the "solutions" for bringing prices down talked about lately by politicians are either totally clueless or pandering/demagoguery. The higher the status of the politician, the more useless their proposals. Clinton was on Bill O'Reilly's show recently promising to break OPEC and legislate windfall taxes on energy producers in the U.S. McCain wants to suspend gas taxes.

Now the absurdity with the SPR.

From Leanan's link:

How about you go the extra “mile” and equip cars with a self pressurizing system? It doesn’t have to be complicated. As we drive, air is compressed and fed into the front of the car. An additional compressor and pump could equalize tire pressure when sensors trigger a low pressure warning. It wouldn’t be enough to fill a flat tire, but it could certainly be enough to keep a constant pressure.

The technology is already there. Military HMMWVs (Humvees) have had the ability to increase/decrease their tire pressure from inside the cabin to quickly adjust to varying levels of terrain. A lower tire pressure, in this case, increases the tire’s footprint giving it more traction in sandy conditions.

That would probably add so much weight it would cancel out the fuel savings. Be good for the GDP perhaps...more techs, installations on used vehicles.

From Tire pressure monitoring systems (Auto Tech, Canadian site):

Tire pressure monitoring systems seem like a good idea. However, they only warn when a tire is getting dangerously low, and if the warning light comes on every time there is a large outside temperature change, then drivers begin to ignore the warning and the systems become useless. TPMS is designed to provide safer motoring, but these warning systems do not replace regularly checking the tire pressures.

Seems like a sensible approach would be to gently mandate that filling stations put up signs advising drivers to check their tires. And stations generally charge about 50 cents to use their compressor anyway, they'll pick up some spare change in the process, until drivers break down and buy their own compressor that is.

I would also consider that their may be "strategic" reasons right now for filling up our Strategic Petroleum Reserve, regardless of price. Many world changing events can occur between now and election day.

This doesn't strike me as being very plausible - the year on year change is from 680 million barrels to 700 million barrels - that's a very marginal increase, and adds no real strategic benefit. I suspect that it's mostly a case of Bush being an oilman and delivering on one of his "pledges" to his good-ole-boy constituency to fill the SPR by the end of his term - he's not going to succeed in this, as I can't see them continuing to chuck in a further 100kbpd for the next 8 months to bring the number up to 727 million barrels.

It only takes one bad hurricane ripping through the GoMex to reverse the trend.

There appears to be a misunderstanding of how the SPR is controlled, directed, and used.

The Energy Policy Act of 2005 (P.L. 109-58) permanently authorized the SPR and required it to be expanded “as expeditiously as practicable” to 1 billion barrels of crude oil. There is major construction work ungoing at this time to expand the SPR to the 1 billion storage capacity.

The Government is required by federal law to keep filling the SPR up until it reaches its capacity - unless a "severe energy supply interruption" occurs. The SPR was never authorized, or otherwise intended to be, some type of oil price control mechanism. However the SPR has been repeatedly used to control prices since oil was about $40 - and quite frequently in the two years after Hurricane Katrina stuck. I do agree however that for a short time period just after Katrina, tapping the SPR was appropiate in regrads to its stated purpose.

Anyway, as Robert says, the fill rate is so slow its effect on the marketplace should be almost insignificant.

http://ncseonline.org/nle/crs/abstract.cfm?NLEid=1614

Hello Charles Mackay,

Thxs for this info. I am of the opinion the SPR should be saved for future generations as much as possible: it will provide the energy for making a lot of bicycle and wheelbarrow tires for a long time. This is obviously much better than a quick reversion to the Nuahtl Tlameme backpacking scheme. Recall that the Chinese considered rickshaws and wheelbarrows top-secret logistic-weaponry.

Another comment: with SpiderWebRiding a person doesn't have to worry about energy losses from under-inflation. The steel wheel on steel rail is the maximum in power-transfer efficiency, and one set of wheels may last a lifetime. How many sets of petro-tires will we waste until we come to this realization?

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Yes, instead of blaming the present adminstration for filling the SPR, they should be congradulated for mostly filling it when oil was less than $40 - and more readily available. It's about the only thing they've done right.

Also, if I was King of Saudi Arabia, I would be slowly reducing the output of the oil fields for future generations. Perhaps that's even their unannounced plan now.

Anyway the forward thinking of you and others may make life just a little bit better for those that follow us. Thanks.

Also, if I was King of Saudi Arabia, I would be slowly reducing the output of the oil fields for future generations.

I doubt it, because none of those future generations are supporting you in power or going to hang you from a lamp post if you don't buy them off.
At the moment living in a western democracy (especially the US) means you are enslaving your children for your current comfort via the national debt, what is most depressing is that there is almost nothing to show for it except politicians fat salaries and decaying infrastructure

If I was King of Saudi Arabia and my oil production was declining I would be interested in claiming that I was reducing output in order to save it for future generations.

If I was King of Saudi Arabia and my oil production was declining I would be interested in claiming that I was reducing output in order to save it for future generations.

No doubt you would, but would that be actually what you were doing? I think not, you'd just be putting a spin on reality.

Other useful things to have:

Daypack: For walking commutes to/from work, or for shopping trips where you just have a few small things to carry home.

Garden cart (the type with two bicycle wheels): These will carry more stuff than a wheelbarrow, and are far more versatile. It might even be possible to rig up some sort of harness and tow these behind yourself (or a bike, or a beast of burden) for miles, hauling stuff.

Hand cart: This would be just the thing for shopping trips where you need to haul home more stuff than will fit in a daypack. Bring two or three boxes or milk crates with you, and you should be able to bring home a week's worth of groceries.

Garden cart (the type with two bicycle wheels)

It's not worth being too precise in your definition of "wheelbarrow", there are plenty of two wheeled, wheel barrows in places like China mostly having the wheels under the centre of gravity, lots of carts built that way too.

I am of the opinion the SPR should be saved for future generations as much as possible

Yep.

And say, if one cared about one's nation, pumping of domestic oil should be heavily taxed in favor of keeping it in the ground, while using other peoples' exported oil while they're silly enough to export it.

Only a matter of time until the smart nations figure this one out. M.K. Hubbert recognized it.

Sunday Times , Irwin Stelzer:

http://business.timesonline.co.uk/tol/business/columnists/article3908044...

From The Sunday Times

May 11, 2008

America must learn to love dearer petrol

American Account
Irwin Stelzer

ASK the wrong question, and you get the wrong answer. The question being asked by Hillary Clinton and John McCain - and that covers just about the entire political spectrum - is, “How can we lower petrol prices?”
Their answer: reduce the federal tax of about 18 cents per gallon. The reasons that is exactly the wrong policy are too many to list here. One is that oil producers, or oil companies, or service-station operators would raise prices by an equivalent amount. But give the pandering pols the benefit of the doubt, and assume that prices would go down. The right question is: “Is it a good idea to lower petrol prices?” The right answer is “no”.

Lower petrol prices would encourage Americans to drive more, use more petrol, emit more pollutants, and increase the demand for crude oil. So regimes hostile to America would sell more oil. Venezuela’s Hugo Chavez, whose government owns some 8,000 petrol stations in America, must be astonished to learn that leading American politicians are eager to increase his revenues. And the Saudi financiers of jihadists and Wahhabi mullahs who fuel antiAmericanism would be pleased to have a few extra hundred million. So would Vladimir Putin.

Better that, figure our politicians, than to take the political risk of increasing taxes on petrol, reducing demand and getting to the consumers’ wallets before Opec (the Organisation of the Petroleum Exporting Countries) and the unfriendlies do.

The wrong question - how do we lower prices - also creates pressure to stop the flow of oil into the Strategic Petroleum Reserve. Stop buying oil, critics tell George Bush, and demand pressures will ease. Better still, sell off some of the reserve, and increase crude supplies. Either might drive down prices and, unfortunately, increase imports - or have only the effect of reducing our ability to confront a supply cut-off.

From the same article:

Second, are there cost-effective ways of increasing the supply of crude oil? Probably. Studies that showed that the environmental cost of drilling in Alaska and offshore Florida and California exceeded any benefit from new discoveries are now out of date. The benefits were estimated when oil prices were less than half current levels. So the benefits of stepped up exploration have multiplied with the increased price of oil, while much has been learnt about reducing the environmental impact of such drilling.

Final sensible question: “Can anything be done to increase supplies of oil from the world’s important suppliers?” Answer: yes, if there is the will to act. The Saudi regime depends on the American military umbrella for its long-term survival, the Mexican government depends on remittances sent to poor Mexican families from the millions of its citizens working in America, and the Opec cartel exists only because the State Department prevents the antitrust authorities from breaking it up. A serious American administration would be capable of explaining to the Saudis, Mexicans and Opec that continuation of these indulgent policies is dependent on their willingness to allow western firms to develop new reserves and wring more oil from existing fields in their countries, and to remove cartel restrictions on current production.

So that is the answer!
Drill and Kill!

Thank Goodness there are no geological constraints to oil production!