Trump Should Release SPR Oil Reserves On Monday
EconMatters | Jul 01, 2018 03:04AM ET
The speculators are at it again in the oil market, pushing up prices beyond the fundamentals. Sure the market is tighter than it was two years ago, but one look at gasoline inventories tells you there are more than ample petroleum supplies. In fact we have more gasoline inventories than a year ago, and we still have over 400 million barrels of oil in storage with both Saudi Arabia and Russia now free to increase production limits going forward, something russia has been chomping at the bit to do the last year of the OPEC deal. Throw in the US Oil production near 11 million barrels per day at all time record levels, and things are not near as tight in the oil market as the oil bulls would have you believe right now.
If Donald Trump is smart he will release 100 million barrels of the Strategic Petroleum Reserves on the market ASAP and drive the oil speculators out of the market, causing oil and gas prices to plummet, and thereby stimulating the economy all over again with a massive tax cut for all consumers. This should play well for the voters as Donald Trump will have positively affected their collective pocketbooks with lower gas prices. This would actually be pretty smart because we would be selling reserves at near the top of the market, and we could buy them back in the future at much lower prices during the next economic recession. Plus with large global storage these days and massive diversified global production, with the US alone producing near 11 million barrels per day with the capabilities of going much higher in the future. The Strategic Petroleum Reserves aren`t near as relevant as they were back in the day when the United States got most of their oil from the middle east and basically stopped domestic oil production for all intents and purposes. A 100 million barrels release from the SPR will be meaningless in terms of government inventory levels given that we are at near record storage levels now at 660 million barrels in storage, and there was talk that Congress wanted to do this anyway because they wanted the funds for alternative uses. This would be a win win for the Trump administration and the Republican party, and of course all consumers at the gas pumps.
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