OPEC asks U.S. to tap reserve
The Organization of Petroleum Exporting Countries has called on the United States to dip into its strategic petroleum reserve to help deflate oil prices, the cartel's president said Wednesday. "We had communication with them," OPEC's president, Purnomo Yusgiantoro, told reporters, referring to U.S. policy makers. "I asked them to use their reserves." Purnomo, who is also Indonesia's oil minister, did not describe Washington's response.I am against tapping the reserve just because the price was high. The strategic petroleum reserve is there for strategic reasons. If there is a serious disruption in the supply of oil (not likely, but possible) we will need it. Further, unless you have good reason to expect that the price of oil will drop soon using this supply would only temporarily relieve the situation, and refilling it would likely cost more in the future. Now, if you did know for sure that the price was going to drop, perhaps tapping the reserve would make sense (buy low, sell high). I am not sure I want our Government involved in futures speculation in this way though.
posted by Dave Justus | 10/27/2004 09:12:00 AM
3 Comments:
"I want our Government involved in futures speculation in this way though"
sure, then they can tell the drug compaines what price to sell the goverment drugs at, then the goverment can sell it at a higher price making a small profit.
No problem Aric. Very good info.
To the items you listed I would add Iran, which could face sanctions or an attack (by us or Israel)
Most experts think there is about a $10 instability premium on the price of oil, but this premium could be around for a while.
Of couse i would like to point out that keeping the price low actually keeps compeitors out of the market (alternative fuels, and other oil drillers and refinaries).
So of couse opec would want the price low, they could lose market dominace if anyone could drill oil and make money.
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