General Discussion

and various taxes and fees. Probably some small royalty percentage as well. But in the end the companies extracting and refining THEIR fossil fuels can sell them to whoever they want (well, I guess they can't sell to Cuba, so there's some rare exceptions).

I recently also learned that despite being the biggest producer, we still IMPORT more crude than we EXPORT (albeit a lot of our imports come from Mexico, Canada, and Venezuela and not that much from the Middle East). That's because these sources produce petroleum that is more akin to the oil the US itself produced for it's first 100 years of production, which is now post-peak and it's production in permanent decline since circa 1970. It's been more than offset volume-wise over the past 15 years or so by fracking, but the US lacks adequate refining for the type of oil that the frackers are producing, so that crude is mostly exported to countries with the right refineries for it (China, India, Netherlands, to name a few).

If world oil prices jump, then finished product costs in the US are going to jump as well. The profits, however, go straight into the pockets of the companies producing the oil and there's no means by which the government can control what we all pay at the pumps. Even opening the reserves only does so much, esp. when there's no actual end in sight to the supply shock. They're going to release the reserves slowly under these conditions.

In fact I looked up the numbers: 172M barrels over 120 days, which means it replaces about 21% of the petroleum the US imports per day, but that amount is only about 7-8% of total daily US consumption. On top of that, at *most* the strategic reserve gives US refiners a 5% discount vs. prevailing global prices. ALSO the companies don't HAVE to pass all of that along to consumers. The government controlling that would be socialist, doncha know

So that means refiners have a chance to replace up to about 21% of their feedstock with oil they bought from the reserve at up to a 5% discount vs if they'd bought it on the open market. So taken as a whole an SPR release of that size saves the refiners about 1% of total feedstock costs, with no obligation to pass it along to US consumers. The amount of 'easing' of prices at the pump is going to be extremely limited under these conditions. The US consumer is at the mercy of global crude prices even with SPR releases.