Friday, May 16, 2008

US to cancel orders to fill Strategic Oil Reserve

The move by the US to stop making purchases to fill the US strategic oil reserve in July could have been much more strategic. They missed an opportunity in the explanation.

The amount of oil involved in relation to the total US consumption may not be big enough to move the markets, but a well crafted statement might have. They should issued a statement that purchasing oil reserves at these levels no longer makes sense. This could have been coupled with the announcement of say... Defense Department contracts with companies like Amyris and others to produce other, more reliable sources of fuel.

The notion that the US government has concluded that $130/barrel oil is too much to pay and that we will find a work-around instead would cause speculators and investors to stand up and take notice.

No comments: