[sysfce2]

$this->bbcode_second_pass_quote('Princess', 'I')'m filling my gas tank when it gets half empty. I also put a locking cap on even though I realize if someone really wants my gas, they'll punch a hole in the tank. It's just one of those things that sort of makes me feel better.

[Princess]

I'm feeling very fortunate, sysfce2. I started a long-term temp assignment just 10 miles from my house and rush-hour traffic is going in the opposite direction. Last week, it took less than half a tank to get to work AND run errands on Saturday.

[meekoil]

$this->bbcode_second_pass_quote('sysfce2', 'I')t significantly shortens fuel pump life when the fuel level is low in most fuel injected cars, as the fuel is used to cool in-tank pumps.

[Decontaxable]

you know, maybe I should buy a gas station. by next week my investment will have doubled and I can lock the pumps any time.

[MonteQuest]

Here is a piece I wrote some time back...a couple of years in fact. I thought I had already posted it on this site, but I can't seem to find it. Note the part I have put in bold. With the new SPR goals, we already have seen the biggest one-day jump in oil prices in 16 months.

During the 1973-74 oil embargo, gas prices doubled within days. Gas rationing resulted in hoarding, and Western economies accustomed to cheap oil sputtered into recession. Rationing of gasoline forced many motorists to wait hours in long lines at gas stations to obtain just a few gallons. Drivers of vehicles with license plates having an odd number as the last digit were allowed to purchase gasoline for their cars only on odd-numbered days of the month, while drivers of vehicles with even-numbered license plates were allowed to purchase fuel only on even-numbered days. People rented their license plates for the day if they had gas and others didn’t.

People slept in their cars overnight to be in the front of the line. You couldn’t buy a locking gas cap, gas can, or siphon device to save your ass. People punched holes in your gas tank with a chisel to get around the locking cap. Fist fights broke out at the pump, tempers flared, guns were drawn; people got hurt.

There was some black market gasoline hoarding. Some people hoarded it for their own use. You would often see two or more 5 gallon Jerry-cans strapped to the bumper of cars or in the backseat. The “approved only” gas containers grew out of this time, as people would fill up milk jugs or glass bottles at the pump. There were lots of Car-B-que's. It wasn’t about the price of gas; it was about getting any at all.

On the world scale, there is a degree of hoarding as well. It is called the Strategic Petroleum Reserve (SPR). This time around, I think it could have a far larger impact, as it will be a new source of global demand. The U.S. SPR is the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 70’s oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve.

Developed nations across the globe started to build their own strategic oil reserves in response to the oil crisis in the 1970s. Currently, oil reserves of the United States, Japan and Germany can meet these countries' oil demands for 57, 161 and 127 days, respectively. As oil prices continue to skyrocket, oil-guzzling developed nations are taking measures to increase their strategic oil storage.

China is building a national strategic petroleum reserve that will consist of three tank farms, co-located with major refineries, and will be built and filled in phases, with the first phase using its own oil. According to Zhenhai Strategic Oil Reserve Administration in east China's Zhejiang Province, 16 oil-tank facilities will be completed by the end of August 2005 and oil storage is expected to start by year-end.

Construction on four more oil reserve bases will be finished by the end of 2008. The strategic oil reserve will provide the equivalent of the country’s 30-day oil imports.

India is planning to set up a strategic petroleum reserve equal to 15 days of the country's oil consumption.

And who knows how much speculator hoarding we will see as oil prices head for the moon. My main point is that today the futures market is telling people to hoard oil. That includes not just refiners with inventories. It also includes anyone with oil in the ground. The futures markets are saying, "If you leave the oil there, it will be worth more later, so don't bother pumping any oil now."

If gas rationing comes to your town, be prepared for the worst; it can and will get ugly.

[SoothSayer]

Good post MQ.

Hoarding will be one of the canaries in the mine.

It will be a "wisdom of the masses" indicator that a resource is at risk of becoming rare and/or expensive.

[Tyler_JC]

Great post Monte, it reminds me of a "what-if" article I read about Norway.
The article created a scenario in which Norway decided to stop exporting oil in order to save more for its own future use and as a result, oil prices exploded and US warships were on their way to the North Sea to "negotiate" with the Scandinavians.
Countries like Venezuela, Iran, Nigeria, etc. will continue to pump out at full speed ahead because they are extremely poor and need the revenue to fund their governments. But what about countries that could stockpile more of their own oil production without causing fiscal dangers and in fact, might actually help their balance sheet?

If Saudi Arabia cut exports by 10% and then oil prices rose by 15%...the kingdom would have a double benefit. They could get more revenue and keep more of their oil for future sale. If more oil exporting countries follow the same logical path, we could be looking at an artificial peak within the next year or two regardless of what would be geologically possible!
Remember, in the 70s when OPEC cut oil exports, they actually saw an increase in total revenue despite significantly reduced volume. Will history repeat itself?

[MonteQuest]

$this->bbcode_second_pass_quote('Tyler_JC', ' ')If Saudi Arabia cut exports by 10% and then oil prices rose by 15%...the kingdom would have a double benefit. They could get more revenue and keep more of their oil for future sale.

[MrBill]

MonteQuest.
An SPR in a 'importing country' does not add to demand in the long-term. It is a cushion against short-term supply disruptions. In my opinion a 'hefty' SPR by users or importers of crude reduces the leverage of oil producing countries.
As we clearly saw in 2006 this geo-political premium was circa $20 per barrel. Hefty, by any measurement. If all energy users have adequate SPRs then it reduces this emergency suppy premium for everyone. I would sooner see that crude users have their own SPRs of 50-60 days (I think your 150-160 days is wrong?) usage than be held hostage to Iran's political whims?

Also, as for hoarding. There is naturally a shelf-life to gasoline. You are right. It is nasty out there if you need to fill your tank. But SPRs and hoarding of gasoline are two different themes.
As we have seen already elderly people in particular have been victimized by fuel oil thieves last winter. Even on farms where many have their own storage tanks this is a problem. So hoarding is only as effective as your abiltity to guard your stash!

[MonteQuest]

$this->bbcode_second_pass_quote('MrBill', 'M')onteQuest.
An SPR in a 'importing country' does not add to demand in the long-term.

[cube]

In the long run having a SPF is pointless. If we all agree that the ultimate fate of crude production is to drop.....can you imagine anything more worthless then a gigantic container designed to hold crude oil?

[MonteQuest]

$this->bbcode_second_pass_quote('cube', 'I')n the long run having a SPF is pointless. If we all agree that the ultimate fate of crude production is to drop.....can you imagine anything more worthless then a gigantic container designed to hold crude oil?

[NeoPeasant]

$this->bbcode_second_pass_quote('MonteQuest', ' ')People slept in their cars overnight to be in the front of the line. You couldn’t buy a locking gas cap, gas can, or siphon device to save your ass. People punched holes in your gas tank with a chisel to get around the locking cap. Fist fights broke out at the pump, tempers flared, guns were drawn; people got hurt.
There was some black market gasoline hoarding. Some people hoarded it for their own use. You would often see two or more 5 gallon Jerry-cans strapped to the bumper of cars or in the backseat. The “approved only” gas containers grew out of this time, as people would fill up milk jugs or glass bottles at the pump. There were lots of Car-B-que's. It wasn’t about the price of gas; it was about getting any at all.
If gas rationing comes to your town, be prepared for the worst; it can and will get ugly.

[MonteQuest]

$this->bbcode_second_pass_quote('NeoPeasant', ' ')When the gas lines come, I will walk or cycle by them in peace. I will not be joining them. When the rationing starts, I will dutifully collect my share, and then barter it for whatever my neighbors might have that I consider useful.

[IanC]

Is it just cynical of me to suspect that the SPR isn't for you and me but for the military and other government/elite types? If supplies are truly disrupted for months, will we waste the SPR keeping people driving to their dead-end jobs and the trucks delivering cheap plastic junk?
My guess is that if the disruptions last that long, the only vehicles we'll see on the road are military HUMVEES and troop transports, armored Cadillac Escalades driven by really rich people, and natural gas busses taking the unruly to KBR's detention camps. I'll be biking with Neopeasant and trying to grow more potatoes in my yard. That and trying to stay slim so I'm not rendered for biofuel.

[cube]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('cube', 'I')n the long run having a SPF is pointless. If we all agree that the ultimate fate of crude production is to drop.....can you imagine anything more worthless then a gigantic container designed to hold crude oil?

[MonteQuest]

$this->bbcode_second_pass_quote('cube', 'O')kay fine, you have a full tank of crude that will last you for a year.

[MonteQuest]

$this->bbcode_second_pass_quote('cube', ' ')It should be noted that during the 1 - 2 punch of hurricane season last time, there was NO real physical shortage of crude per say. It was bullish sentiment that pushed the prices up. The market was technically Overbought so it was due for a correction anyways. That's why prices dropped so easily when crude was released fromt the SPR.

[SoothSayer]

$this->bbcode_second_pass_quote('', 'O')kay fine, you have a full tank of crude that will last you for a year. So what? What do you do after 1 year? Relative to the fate of an entire civilization what is 1 year worth?

[JPL]

$this->bbcode_second_pass_quote('MonteQuest', 'I')f gas rationing comes to your town, be prepared for the worst; it can and will get ugly.