Thursday, August 10, 2006

Strategic Implications

It struck me as slightly odd to hear a little snippet that the Strategic Petroleum Reserve would be potentially tapped to deal with the outage of supply from Alaska due to the pipeline repairs.

Because in other past times of high prices or supply crunches, the Reserve was never touched.

But I didn't think further of what it might mean.

The blogger Aristides has some fascinating thoughts here:
BP, based in Britain, said late on Sunday that it had begun closing the Prudhoe Bay field in Alaska after discovering a small pipeline spill in a move that will slash production by 400,000 barrels per day.

Firstly, is it possible that we purposefully turned off a large supply of oil from oil fields we control?

Well, we know an Iran-related turn off would shock the system with Surprise and Uncertainty.
War with Iran would cause a major oil disruption. We could be adjusting in advance.

So we're preparing for war?

We could be. If we are, the strategic reserve would be an important step. And this way it doesn’t cause stress on public perception and doesn’t tip our hand to the Iranians.
I sure hope we're that devious.


Anonymous Bob.Pgh said...

I don't follow the reasoning. Maybe I missed the whole point. Anyway, if we're shutting off a petroleum source on purpose in order to begin an adjustment process, why ameliorate the need for adjustment by tapping the strategic reserve? I guess the answer could be that using the reserve lends verisimilitude to the idea that shutting off the source is a big problem. On the other hand, wouldn't it be better to have all of the reserve available for the military when war does start?

I do hope, however, that we really are devious. I say deceive the bastards in any way that helps us.

For instance, it would be nicely devious were we to SAY that we are shutting off the petroleum source but, instead, were secretly shipping and refining the petroleum and storing the products in a vast array of hidden storage tanks. Of course, such storage tanks don't exist but that would be devious.

7:01 PM, August 10, 2006  
Blogger RDS said...

I think the point is the notion of the reserve being tapped, which of itself may cause panic, has already been broached. So the market knows it's "in play" and won't have to wonder. But it was opened for an event that in itself wasn't too shocking, so we eased the market into accepting the opening a strategic asset. The shutoff itself is probably not big enough to actually cause any significant tapping, so the reserves won't really be reduced by the early declaration.

8:29 PM, August 10, 2006  

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