US releasing strategic oil reserves to Chinese company that buys Russian oil

AnnieA

AnnieA

Well-known Member
Location
Down South
Don't at all see how this is helping Ukraine or US gasoline prices.

From Dept of Energy website:

https://www.energy.gov/articles/doe...ic-petroleum-reserve-combat-putins-price-hike

Summary:
Nearly 1 million barrels sold to Unipec America, Inc. (0.95 million barrels). Unipec America per their website is: "China’s largest Trading company. Wholly owned subsidiary and trading arm of SINOPEC. "​


From Bloomberg (27 May 2022)

Excerpt:
China’s oil trading giant Unipec has significantly increased the number of hired tankers to ship a key crude from eastern Russia. ....China International United Petroleum & Chemical Co., better known as Unipec, has chartered at least 10 tankers so far this month to transport Russian ESPO crude...a fivefold fivefold increase on the number of vessels booked for the trade a month earlier, data from shipping analytics firm Vortexa show.​
 

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Oil is a world market, quite fungible. Specifying who can buy oil only makes the transaction less efficient, and would likely just mean less money for the US.

I guess thinking is that dumping this oil will lower world prices, but I am skeptical. 1 million barrels is just a drop in the bucket, the world consumes almost 90 million barrels a day.
 

My husband was an electrical engineer who worked for the Dept. of Energy. His main project was SPR. I remember him saying at the time that the purpose of this oil reserve was to have an emergency supply for this country if needed. I don't think the price we pay at the gas pump had a lot to do with it.
 
Sunny said:
I don't think the price we pay at the gas pump had a lot to do with it.
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No, it shouldn't but that is the reason cited, see Biden announces huge strategic oil reserve release to curb gas prices

This is not the first time its been done, but I doubt it ever works. Adding ~1% to world oil supplies just isn't enough to matter. I guess "huge" is in the eye of the beholder...

Not sure how much sense the Strategic Reserves make, but if they do we need to save them for actual emergencies. Not use them for political grandstanding. As I said this is not the first president to do so...
 
Alligatorob said:
Oil is a world market, quite fungible. Specifying who can buy oil only makes the transaction less efficient, and would likely just mean less money for the US.
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Per the Dept of Energy link, we did specify the 12 companies the 1 April 2022 reserve sales went to. Not even one barrel should go to Unipec--a CCP controlled corp ramping up their purchases from Russia.
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Oil companies could step up production to bring down prices, but they're reaping record profits, so why would they? Profit is all that matters. And if they invested in new production, that would cut into their profits, and when demand slows as we transition to alternative energy sources, they'll have wasted that money.
 
SeniorBen said:
Oil companies could step up production to bring down prices, but they're reaping record profits, so why would they? Profit is all that matters. And if they invested in new production, that would cut into their profits, and when demand slows as we transition to alternative energy sources, they'll have wasted that money.
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Emphasis mine: That's exactly my thinking. In the past there has been a "Drill baby, drill" philosophy from oil companies. I can see why now they aren't wanting to spend billions on developing new oil drilling knowing it's very short term.
 
DonnyO said:
Short term? Because we can all afford EV's? Because we have a Electrical Grid in place that can handle 300 million vehicles? It's a push by the Administration to make it painful to drill for oil. Putting the blame on oil companies, your living in LaLa Land.
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No. I'm not blaming them at all. I understand it isn't a short term need (besides your reasons, we do not yet have the battery tech to replace fossil fuels) but leaders asking them to ramp up production want it to be.

You can find a March 2020 direct quote: “No more subsidies for the fossil fuel industry. No more drilling, including offshore. No ability for the oil industry to continue to drill, period. It ends.”

In March 2020, it was: "We're putting you out of business." In 2022 it's: "Help, people are mad and struggling with gas prices so start drilling."

If I were an oil company executive, I wouldn't rush to spend big money developing new drilling right now.
 
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Sinopec, Unipec, CIUP, etc......... in the broad scheme of things I don't thing whose temporary hole oil comes out of, and whose hole it goes into is not that critical. What is critical for this time in history that it keeps on flowing.
 
fuzzybuddy said:
Sinopec, Unipec, CIUP, etc......... in the broad scheme of things I don't thing whose temporary hole oil comes out of, and whose hole it goes into is not that critical. What is critical for this time in history that it keeps on flowing.
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I completely disagree. The US should not sell to a CCP company who also buying--at rapidly rising volume over the past few months--from Russia. There are plenty of countries wanting to take a stand and buy from anywhere but Russia; sell to them.

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IMO the government shouldn’t be releasing oil reserves or reducing gasoline taxes at the pump.

It offers little in the way of financial relief and sends a mixed message that ultimately results in higher consumption.

The government should be emphasizing conservation.

We all need to start playing the long game and look for ways to reduce our consumption of fossil fuel.
 
I think they're just making a mess out of all this stuff. Electric cars when some places can't handle the electrical load they have. Selling off oil we need in our own country. Shipping our food and supplies off to other countries who can't manage and now we're short on everything.
 
AnnieA said:
No. I'm not blaming them at all. I understand it isn't a short term need (besides your reasons, we do not yet have the battery tech to replace fossil fuels) but leaders asking them to ramp up production want it to be.

You can find a March 2020 direct quote: “No more subsidies for the fossil fuel industry. No more drilling, including offshore. No ability for the oil industry to continue to drill, period. It ends.”

In March 2020, it was: "We're putting you out of business." In 2022 it's: "Help, people are mad and struggling with gas prices so start drilling."

If I were an oil company executive, I wouldn't rush to spend big money developing new drilling right now.
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There should be no corporate welfare for companies that are raking in billions in profits. Unfortunately, Congress is bought!
 
I think that the US strategic oil reserves has become a money making oportunity. The government buys oil and puts it into the reserve when the price of oil is low then pumps it out and sells it when the price of oil is high making huge profits from it.
 
DonnyO said:
Sorry. Meant to quote Senior Ben. This Administration is making it difficult to drill on new leases. Why spend money on searching for oil? It's the people that suffer not the decision makers. I'm all for efficient Energy but its going to take time.​
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According to this article, Wall St. is to blame...
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As to why they weren't drilling more, oil executives blamed Wall Street. Nearly 60% cited "investor pressure to maintain capital discipline" as the primary reason oil companies weren't drilling more despite skyrocketing prices, according to the Dallas Fed survey.​
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Only 11% cited environmental, social or governance issues; 8% said they had difficulty getting financing; 15% cited other reasons.​
 
oldman said:
Actually, I think I smell a rat.
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Same here. These fuel prices, IMO, are a combination of government ineptitude, and corporate greed. I'm in favor of transitioning to EV's, but we are a long way from them being practical for anything other than urban transportation. Instead, our government; thinks that they can force everyone to EV's by "wishful thinking" policies, and the oil companies are only too happy to cease investing in the supply while they are making billions off these shortages.
 
SeniorBen said:
According to this article, Wall St. is to blame...
​
As to why they weren't drilling more, oil executives blamed Wall Street. Nearly 60% cited "investor pressure to maintain capital discipline" as the primary reason oil companies weren't drilling more despite skyrocketing prices, according to the Dallas Fed survey.​
​
Only 11% cited environmental, social or governance issues; 8% said they had difficulty getting financing; 15% cited other reasons.​
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Well, that makes sense according to the discussion above. Oil company investors aren't wanting them to spend big bucks developing new drilling for a temporary emergency when the promises have been for there to be "No ability for the oil industry to continue to drill, period. It ends.” Some government officials are calling this a wartime emergency but it that doesn't hold water considering that our government is selling oil reserves to Russia's ally.
 
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AnnieA said:
Well, that makes sense according to the discussion above. Oil company investors aren't wanting them to spend big bucks developing new drilling for a temporary emergency when the promises have been for there to be "No ability for the oil industry to continue to drill, period. It ends.” Some government officials are calling this a wartime emergency but it that doesn't hold water considering that our government is selling oil reserves to Russia's ally.
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The president was talking about on public lands...
https://www.politifact.com/factchec...-joe-biden-said-no-more-oil-drilling-and-no-/

... and he has since reversed that position.
https://www.nytimes.com/2022/04/15/climate/biden-drilling-oil-leases.html
 
AnnieA said:
In March 2020, it was: "We're putting you out of business." In 2022 it's: "Help, people are mad and struggling with gas prices so start drilling."

If I were an oil company executive, I wouldn't rush to spend big money developing new drilling right now.
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Exactly! .... they certainly can't be turned on and off because someone sez 'just do it'
It doesn't work that way.

Over 100,000 drillers were let go in early 2020. .... the Permian Basin in Texas pretty much shut down.
 
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AnnieA said:
Well, that makes sense according to the discussion above. Oil company investors aren't wanting them to spend big bucks developing new drilling for a temporary emergency when the promises have been for there to be "No ability for the oil industry to continue to drill, period. It ends.” Some government officials are calling this a wartime emergency but it that doesn't hold water considering that our government is selling oil reserves to Russia's ally.
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Yes, "Russia's ally" and China is or soon will be "our enemy". This is an ill-considered decision.
 
Bonnie said:

Exactly! .... they certainly can't be turned on and off because someone sez 'just do it'! It doesn't work that way.

Over 100,000 drillers were let go in early 2020. .... the Permian Basin in Texas pretty much shut down.
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Yes, and 47,000 oil workers in New Mexico.
 

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