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Comment by firebird84 | Hacker News Reader

Why don't we just take delivery of futures contracts directly? Isn't this a great time to fill the reserve?

Pelosi blocked that.

The workaround is to cheaply rent out the reserve as storage space, with the hope that someday a better congress will allow purchasing the oil.

>Pelosi blocked that.

Why should the American people pay to fill it when they can now be paid instead to store the oil? The market's decided that the toxic asset needs to go somewhere and the speculators that bought it (not the producers) will pay.

>The workaround is to cheaply rent out the reserve as storage space

Cheaply? They took a risk in speculating and it didn't work out. The solution is to give them a choice: surrender their oil to the USG (to avoid paying storage fees) or pay the USG for the service of storing it.

No bailouts, fuck that.

I can understand the impulse, and absent any middlemen it would make perfect sense to have the government step in to buy excess production during a crisis to fill national reserves.

But we have speculators who sold us the idea that their profits brought stability to the market, so make them keep playing by their own rules.

Bailout?

It's not a bailout. Prices were negative! We'd literally be _getting paid_ to take oil and put it into our reserve. It's literally the easiest financial decision on the planet.

The fact that Pelosi blocked it demonstrates a fundamental lack of understanding of basic finance.

Hm, I can't find any sources to this effect. Have one? I vaguely recall a bit about paying over market for petroleum to refill the reserve, with the idea being we fill a demand and prop up the gas industry.

McConnell proposed it in the coronavirus stimulus bill but it wasn't in Pelosi's version.

So frackers have to deleverage all by themselves? Cry me a (unpolluted) river.

The USG can top off the reserve at any time and it'd be chump change. They're spending trillions of dollars these days. They're not concerned with a few billion dollars worth of oil here and there.

With negative prices, it's literally the dumbest financial decision not to take the oil - whatever the quantity we're talking about.

Already being done, and that space too is running out.

The reserve is already 90% full.

I am curious, dohappen to have a source for that statement?

Capacity of 717 million barrels. [1]

Inventory of 635 million barrels. [2]

635/717 = 88.5%

[1] https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U...

[2] https://www.spr.doe.gov/dir/dir.html

10% of the capacity at what was NEGATIVE $30 per barrel is still a lot of extra money for doing literally nothing.

Anyone not filling any available storage is a huge idiot.

it is and we do.

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