Timing is Everything

In the mid-1970s, the idea of creating a vast reserve of petroleum in the US to buffer the nation from future crude oil supply shocks gave birth to the US’ Strategic Petroleum Reserve (SPR). It was hoped that establishing the crude oil reserves would cushion American citizens from gasoline supply angst. In times of need, the President would be able to call upon these vast crude oil reserves as a means of keeping America’s refineries fed. While an acute supply pinch has not yet been felt, talks of a crude oil release from the SPR have surfaced in Washington as benchmark crude oil prices rise. At present, the United States appears to be well supplied with gasoline and other refined products which would call into question the true motives behind such a move, should it happen. Instead of Americans with gas pump woes, the beneficiaries of an SPR release might sooner be commercial players in the physical and paper crude oil markets, and those in a position to provide related marine transportation as needed. Download here