With summer approaching, many people are planning vacations and many student drivers are out of school. That can only mean one thing… gas prices are going to skyrocket. Gas prices are just about $4 a gallon right now. Who knows how high they will be midway through the summer. Crude oil is currently around $130 a barrel, so people are trying to find a solution to bring prices down.
The article I read for this week had to do with these rising prices. The U.S. has an emergency stockpile of oil with about 700 million barrels. Some members of Congress called to release some of these barrels in an effort to lower prices. Energy secretary Samuel Bodman disagreed with this idea saying the stockpile is for emergencies and should not be used to affect prices. The article commented that part of this idea to release the stockpile oil was because prices dropped eighteen percent when President Clinton released some of the emergency oil in 2000. Bodman wants to reserve the oil in the event of an emergency or if the flow of oil into the U.S. is cut off. The oil has been used twice in response to interruptions: during the Gulf War and after Hurricane Katrina.
This idea that releasing the stockpile oil could potentially influence prices is interesting. There is a drawback to the plan, though. Bush had stopped adding to the oil reserve after a piece of legislation passed by Congress to halt deliveries. If the government began to release the oil, but failed to add oil back, the supply would be slowly depleted. Although there is the potential to lower prices, what would happen in the event of an emergency? Oil was released after Hurricane Katrina, so what happens if something similar happens and the supply is low? I don’t think release this oil will get the desired effect in the end if it means decreasing the emergency reserve. 700 million barrels sounds like a lot of oil, but the U.S. alone goes through more than 20 million barrels a day. If the flow of oil into the country were halted and we had to depend on internal sources (the reserve), there is the potential to run through the entire stockpile after about a month. I would hate to see the country burn through the reserve to lower prices and then have a national emergency of some sort without this emergency stockpile.
I guess it all depends on how much oil was supposed to be released. I am not sure how many barrels it would take to make a considerable impact on prices, but I am pretty sure it would have to be a lot. I do not think the solution we have been searching for is going to be in releasing this emergency stockpile. Prices seem to have been impacted the most with the demand increasing faster than the supply. If it all comes down to supply and demand, then the prices are out of our control. For now, I guess people should just suck it up or try alternatives like more fuel-efficient cars or carpooling.
I can definitely see where Bodman was coming from in refusing to release the oil. It is for emergencies, not to influence prices and this is not exactly an emergency. Just be thankful you most likely don’t have to buy diesel fuel, it’s close to $5 a gallon.
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3 comments:
I think that this is a very interesting point. We could use the reserve to help out the citizens in our country to help keep gas prices under 4 dollars a gallon at the risk of depleting our only internal source of oil, or we could save the 700 million barrels in the event of an emergency that may never occur. I think i agree with Bodman in saving the oil in the event that oil flow into the US is cut off. I also agree that for now, we should stop driving so much and start carpooling. Its basically like dropping gas prices if we just dont drive as much :)
yeah I'm totally riding my bike everywhere this summer so I don't go through so much gas. But I agree with Bodman in not using any of the emergency reserve oil, because as luck would have it we would probably need that oil down the road when there is more of an emergency than $4 /gallon gas prices. I say lets drill in Alaska and anywhere else because I don't really care about caribou.
Haha, hey, I don't drive, soo, I don't usually have to worry about using gas at all. However, people who drive me around (parents, friends, etc.), spend ridiculous amounts per week because of the amount of driving being done. I agree with LB and say that we do try to conserve that emergency reserve oil.
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