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U.S. stopping oil shipments into reserve

May 19, 2008 Public Transit 18 Comments

In past commentaries I had suggested that dubya might try to do something (other than a tax holiday) to impact gas prices. Comments went like this:

“Can someone explain how the President has any effect on gas prices?”

He doesn´t. Only an idiot would suggest that he does. Oil prices, and by extension gas prices, are set on a world market. It´s that pesky supply and demand thing.

The sad part is, these idiots are allowed to vote, which is why we get the “leaders” that we do.

My response had to do with the federal strategic oil reserve, that two month supply of oil owned and stored by the feds. In the news last week:

Responding to congressional pressure, the Bush administration on Friday said it is suspending oil deliveries into the government’s Strategic Petroleum Reserve for the remainder of the year.

The move came days after Congress passed legislation requiring President Bush to temporarily halt shipments into the reserve in hopes of lowering gasoline prices. The president is expected to sign the bill.

It remains to be seen what impact this move will have on global prices, if any. Still, congress can tell their constituents they tried.

Meanwhile, in parts of the country (like Chicago) motorists are paying over $4/gallon for self serve and nearly $5/gallon for full serve.  Diesel is quite a bit higher.  While some can afford to continue filling the tanks on their Escalades many others cannot.  The working poor are most impacted but they are also most likely the segment of the population not adverse to taking public transit.

I don’t think stopping shipments to the oil reserve will have much of an impact — about as much as a federal gas tax holiday would.  Releasing the millions of gallons of oil in the reserve back onto the market— that could have an impact.

This is our new reality folks.  Do we listen to groups like MoDot and build more highways based on their prediction of more trucks or do we realize we must as a society do a better way of getting people and goods from place to place?


Currently there are "18 comments" on this Article:

  1. Tom Shrout says:

    Over at Urban St. Louis there are a couple of good posts about the funding crisis that Metro is facing and some of their options. St. Louis County’s response in part has been to proposed shifting some money from Metro to country roads. The post is as at

    [slp — yes we must keep existing mass transit systems running while we figure out efficient ways to expand the appeal to more people.]

  2. Dole says:

    The Strategic Petroleum Reserve has something to the tune of two months of supply at the rate Americans are currently using oil. However it’s important to note that, if in the hypothetical situation all oil imports into the US were blocked, the oil would not be sold from the reserve onto the open market and keep America going for two months. The more likely scenario is that the Strategic Reserve would be diverted purely for military purposes.

  3. Dole says:

    Playing games with the Strategic Petroleum Reserve, or giving a “gas-tax holiday” will not lower the price of oil or gasoline. My heart really does break for the working-class people that need gasoline in industries such as truck driving, but they need to realize there is no legislative “silver bullet” to fix the problem overnight. Fact is global demand for oil is growing, with an unquenchable appetite from China, and causing a run-up amongst companies trying to secure supplies before the price rises further. It’s gonna get worse before it gets better……

  4. This wasn’t done in order to lower prices, but because it makes no sense for the government to buy oil when prices are so high.

  5. Jim Zavist says:

    Question – why do we need/choose to “suspend oil deliveries into the government’s Strategic Petroleum Reserve”? I wasn’t aware that we were using them. Aren’t they essentially a static resource? Or, is the reality that the current government is simply now using more than it’s “saving” and just creating another shortfall for the next adminstration to fix/solve?
    And yes, Metro is facing the same challenges every other transportation entity is – fuel costs twice as much now while revenues are essentially flat – the only way to balance this equation is more/new revenues (probably taxes) or cutbacks in services, and neither option has a large constituency.

  6. john says:

    Oil prices are not considered high as demonstrated by the expansion of roads and the public’s appetite for larger and more vehicles as the price at the pump increased in the last five years. The majority of vehicles sold in the USA are fuel inefficient and since 1993 these sales volumes have grown twice as fast as the growth in households. Our dependency on imported oil has grown with the expanding appetite.
    – –
    The failures of local transportation trustees at MOdot, E-W Gateway, and Metro are increasingly obvious to many as they have designed an inefficient and wasteful infrastructure. Rahn describe it as the “Perfect Storm” since funding levels remain inadequate guaranteeing increasing oil dependency and inferior road maintenance. Tapping the Fed Oil Reserve & marketing gas tax holidays are simply pandering to the uninformed.
    – –
    Prosperous and well-managed cities are rapidly preparing for the inevitable problems that higher fuel prices will create from being unable to afford to get to work to the inability to pay for food on the table. Too bad local leadership remains clueless and continues to fund and build unneeded highways instead of supporting policies which improves the quality of life. As Danforth said:”You cannot have this great treasure — that’s the Arch — and surround it by junk,…The highway is junk. The riverfront is now junk. The grounds of the Arch are zilch. There is nothing there.” Where in the St Louis is this not true?

  7. CWEGuy says:

    Gas prices will drop when we take control of our energy future. We must build new refineries and begin drilling in ANWR.

  8. Tim E says:

    Obama proposed a tax credit over the weekend in order to give immediate relief. A tax credit does nothing to decrease the demand or reduce our appetite for oil let alone reducing the price of oil itself. But it goes a long way in convincing people to vote for him. I’m afraid for the future if the government decides to artificially reduced the oil price through our mess of a tax code rather then confonting the consequences of high oil prices. At least high prices put a focus on how dependent our transportation network is on oil.

    I think the reality is that we have whole lot of things to do at once. Higher mileage standards, more research, pursue more of our own resources (yes, open more areas to drilling), pursue alternative energy sources (An affordable electric car would go a long way in taking advantage of our existing infrastructre and resources – from roads to electric grid to clean energy sources), and investing in some multi-modal infrastructrue and rail corridors.

    I don’t think our system or agencies have failed us because we built roads. We might not be that far away from an electric vehicle that is comparable to a small sedan. Plug it into a stored energy source that gets its energy from a solar cell during the day. The energy equation might be turned upside down when we can place a large number of electric vehicles on the roads. Obviously we need to make a big push. But, is it far more affordable then building out a massive amount transit oriented infrastructure that might not get used?

  9. James R. says:

    This is from an article on MSN last Friday on hypothetical $10 gas and it’s relationship to drilling off California and ANWAR.
    Resistance to drilling for oil in Alaska’s Arctic National Wildlife Refuge and off California would shrink. Environmentalists might stand their ground. But as James Williams, an energy economist for WTRG Economics in Arkansas, says, “Let’s put it this way: Y’all wanna drive?” Oil reserves in both areas are thought to be more than 10 billion barrels, double the proven reserves in Texas. That would help feed America’s 21-million-barrel-a-day appetite. :endQuote
    Uh, I guess they didn’t bother to do the math here. 10 billion/21 million/day = 476 days. 1.3 years. A hell of a lot of work for 1 year, 4 months worth of oil. For that matter, even if I’m reading it wrong and it’s 10 billion at each spot, that’s just over 2 1/2 years worth. At full recovery.
    I realize that I’m ‘mathy’ (as my wife would say) but still, how obvious can you get. It’s arithmetic, people. Not differential equations.
    There is no way to save our current cheap-oil based economy, culture, and society. And sorry, but the solar powered electric car simply isn’t scalable. As lovely as climate controlled, high-powered, individual mobiltiy has been, its time is over.

  10. john says:

    Love ENRON, then the electric grid is your salvation, good luck with that. I’m all for clean fuel but electricity cannot do it as our power grid cannot handle the extra output needed even to make a dent in current crude consumption levels. Just like the bicycling grade of a “D” for MO, the Report Card for America’s Infrastructure, prepared by the American Society of Civil Engineers, gives the US Electric Grid a rating of “D. For some knowledge read: http://www.asce.org/reportcard/2005/page.cfm?id=25
    – –
    The average age of power transformers in service is 40 years, which also happens to be the average lifespan of this equipment in the USA. Combine the crying need for maintenance with a shrinking workforce, and we may find that the 2005 blackout that affected parts of Canada and the northeastern United States might have been a dress rehearsal for what’s to come.
    – –
    Alternatives like ethanol to the rescue? Now that’s really funny. To see independence, personal responsibility, freedom from OPEC, clean/efficient fuel and the type of commercial people in StL don’t get to see watch: http://www.youtube.com/watch?v=kLl5y9RZI7c

  11. john w. says:

    There was an interesting documentary on CNN last night projecting the effects of the energy (oil) costs of 2008 into the year 2009, and how we’ve long been warned though recklessly remained aloof. James, you may have seen this, but if you didn’t it’s pretty interesting. Former CIA official official James Woolsey was interviewed regarding America’s ability to defend itself while dependent on imported oil. There was an excellent segment on Brazil’s answer to ethanol (sugar cane base) that allows them to be nearly entirely or entirely independent of imported oil.

  12. Maurice says:

    Gas tax holidays, credits, suspension of the SOR will do nothing to stop the demand that is already here. It just delays by a few weeks at most the pain, and since prices will continue to increase, that pain will be worse when the relief measure wears off.

    I understand every business needs to make a profit, but BILLIONS? I would love for them to impose a windfall tax on the oil corporations, or maybe Marx was right and we should socialize the industry? It couldn’t be any worse if we took the profit motive out of the equation or at least limit it. Oh but wait, all of us have stock in the oil industries (through retirement and mutual funds).

    We should:
    Immediately impose a 10 year plan to become energy self-sufficient.

    Each year we would decrease our energy imports by 10% (or 5% if we went with a 20 year plan)

    Open up the fields we have. We have the technology to do so safely and responsibly.

    Demand by law, high gas economy, high appliance efficiency, recycling in all municipalities.

    Develop the technology to harvest solar and wind. Even if that means someone can see a windmill from their ocean lot view. Expand use of nuclear fuel.

    And there are many other things as well, but it will take courage in Washington.

  13. Jim Zavist says:

    This is a complex, global problem with no easy answers. Even with energy prices more than doubling in the US over the past couple of years, there’s been little reduction in demand. Globally, demand is increasing rapidly as other, especially “developing”, countries approach our level of per capita use. Combine that with the falling value of the dollar, and it won’t matter much where we drill or what goes into the SOR (or not). It’s all about choices. We like (love?) our personal mobility, and are apparently willing to sacrifice many other expenditures (like dining out) to fuel our vehicles. Many of us choose to live miles from where we work/work miles away from where we live. Many of us ignored public transit as a factor in choosing where we bought or rented our homes. Many of us bought vehicles with less than stellar fuel economy the last time we “invested” in one, trading alleged luxury and bulk over real fuel economy. I have seen the enemy, and he is us – you only have to look in the mirror to see a big part of the problem. It’s easy to blame the oil companies for making a profit – they’re only doing so because we’re buying what they have to sell at the prices they’re charging, no different than McDonald’s or A-B or the corner bar. Change will only happen when urban areas become more dense/regain their former density and rural areas become much more self-sufficient, and are much less bedroom communities where many residents are commuting dozens of miles every day to “better” jobs in adjacent urban areas. Locally, moving back into the city is an option too few people are choosing, either to live or to work, or both. It’s also too easy to blame MoDOT, but they’re like any other business, responding to the demands of their users. They’re only building all the new stuff in St. Charles County because of the growth that’s happening out there (driven by individual people voting with their feet and their wallets for [perceived] lower taxes, better schools and less crime). This is all basic economics, supply and demand, and it comes down to individual choices!

  14. Nick Kasoff says:

    > It’s also too easy to blame MoDOT, but they’re like any other business, responding to
    > the demands of their users. They’re only building all the new stuff in St. Charles County
    > because of the growth that’s happening out there (driven by individual people voting
    > with their feet and their wallets for [perceived] lower taxes, better schools and less crime).
    Lower taxes, better schools and less crime isn’t just perceived, it’s reality. But eventually, the cost of living 50 miles from work will be so high that people will have to consider other options. The walkable, transit served areas of the city and inner ring suburbs will become much more desirable choices.

  15. john says:

    Yes it is easy to blame MOdot as they are a large part of the problem. Public expenditures are for public goods and to suggest that individual choices reign ignores market realities. For instance, why was a bike path built along the Page Extension with extremely low density as compared to the area along the New 64? These decisions are not based on market demand but rather on demands of a small minority. As Danforth has accurately characterized “The highway is junk. The riverfront is now junk.” Who builds highways with such low standards and neglects the need for integrated and walkable communities …you? Us? No, MOdot is subsidizing sprawl and destroying the urban environment and our air quality by design.
    – –
    Many of the people I know who now live in St ChuckieLand only did so after the Page Ext was built, not before. With these expanded highways city/inner suburb residents could buy a much larger home for the same price as their urban home. With cheap gas, the decision appeared to be a “no-brainer”, like the idea that MOdot is managed like any other business…that’s absurd at best.

  16. Jim Zavist says:

    MoDOT Is a political animal with a limited (and shrinking – see yesterday’s P-D) budget. It faces multiple demands from multiple politicians, plus it has the unglamorous job of keeping everything that’s already in place functioning. Yes, they are enablers when it comes to suburban sprawl, but primarily because that’s where the growth is happening – chicken or egg can be argued forever, but they’re rarely ahead of the curve when it comes to matching capacity to increasing demand. Sure, the plans are there, for both more highways and more subdivisions, but the “blame” lies a lot more with the local counties and cities and the state legislators (and, by extension, the people who elect them and expect things from them) who want growth than it does with MoDOT, who’s trying to serve the increasing demand. I sure don’t like suburban sprawl, and I favor an expanded transit system, but I also realize that majority rules. When the percentage of people using alternative modes of transit (buses, bikes, trains, etc.) is in the single digits, it’s no wonder that MoDOT is focused on highways – when 90% of your users want them, they better be a priority!

  17. Maurice says:

    But look at what is driving the growth. Is it the residents moving out to Chuckie land because of the jobs or is it because the jobs are out there and thats why they moved there. Lets face it, the City doesn’t have many big employers left whereas Clayton is jammed, and you have Monsanto, Pizser, Mastercard and other big employers in the county, not the city. Don’t get me wrong, the city has many employers, and quite a few large ones. Can all their employees live in the city? Yeah, probably, but even the city doesn’t have enough jobs if everyone consolidated.

    At this late stage in the game, its hard for a lot of people to live close to their jobs. I mean, how many can afford to live within 5 miles of Clayton? 5 miles of Chesterfield? And the lack of alternate routes (buses, bike, etc) makes it even worse.

    We are indeed our own worse enemy. It won’t be till each and every one of us can no longer afford our comfort level (and gas) that we will get serious about change, unfortunately it won’t all happen at once, which makes change even harder.

    Talk about complex!

  18. John M. says:

    I must admit I have been riveted by transportation since I was a child. I inherited it from my father, an engineer. I indeed agree transportation is a “complex and interesting” issue. I really believe myself to either be open minded or gulliable to others opinions, depends on the day, I guess.

    In rereading an old article from one of my car magazines, the only print media I still pay for, I came across a fairly intriguing opinion from one Mr. Patrick Beddard, an editor for Car and Driver and so happens to hold a masters degree in Mass Transit. The article appears in the June’07 issue on page 34.

    In it he writes that “outside of Manhattan, Boston and maybe Washington D.C., light rail is a fraud on the taxpayer. If people wanted to live in Manhattan densities we wouldn’t be sprawling to the suburbs. In this democracy its the people and not the planners that are voting with their 30 year mortgages for free standing houses and grassy backyards. The spread out room to exercise our riding deeres, murrays and toros is in fundamental conflict with Mass transit. It would have to stop every eight to ten blocks to pick up two or three people, that won’t win any riders from cars.”

    The economic value that society places on light rail transit is reflected in peoples willingness to pay for it, says a study by the Federal Reserve Bank of St. Louis. “Fare revenue only covers 28.2% of the operating costs in St. Louis.” And that is after taxpayers cough up the full load of paying to build it in the first place.

    For the sake of brevity, I am past that point, already? There is much more information to be had in the costs of congestion and the costs associated with it compared to mass transit. I just think it is important to note that dissent abounds in how people act in their propensity to push our suburban lifestyle ever away from any concievable central core. I am not one of those people and I despise St. Charles for what is represents to me. I like the idea of cities, maybe because I grew up in the burbs, wherein my dad growing up in the city cannot stand it. That is not the only thing we disagree on. But I believe it is this entitlement that the previous generation felt towards the “American Dream.” Yes they worked hard, I am not even saying that, but I work hard too, am I entitled to absorb more resources than are essential to sustain a reasonable expecting person. Do I need a boat, a house with 4 bedrooms, couple of acres, a vacation house, on and on and on, of course not. We are not here by accident.

    It is that sense of entitlement that suburbs thrive on. You worked hard, you deserve it. More, More and even More. Perhaps it was a weakness to media and manipulation, although, I doubt it. Because there is no personal responsibility in it, so it isn’t true to me. I think the reality comes down to the kids. It is all motivated by the kids. Germ free, good schools, safe environs, little or no crime. But while one part of the population turns its back on the other, those problems become bigger. Because those that are left to deal with it, have less and less recources to do so. It is part of a denial of our connection to one another, it is one facet of a God complex, as I refer to it, although it is more of a self absorption into ones self with less regard for the other poor sap, because they can afford to leave it.

    I am not intending to be preachy, so i will stop now, I attempt to understand my own thoughts by writing them down. So I thank you for allowing me the venue to express that. I just think when one looks at something like the transportation issues facing us and the nation, there is much to it. It isn’t all plain and wrapped up for us to solve in some nice easy package that will address it all. There are the countless others that accept the way things are, is just how they are. And until we can accept that fact, we will be angry and confused by the choices of others, yet only in need to change ourselves and share it with others by action.


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