A letter to Senator Schumer

Chuck Schumer is one of my senators from New York. He thinks that the government should use the Strategic Petroleum Reserve to offer "relief" from high gas prices when necessary. In fact, he tried to tack on an amendment to the energy bill (which may or may not make very much sense, but I think I get it):
"To express the sense of the Senate regarding management of the Strategic Petroleum Reserve to lower the burden of gasoline prices on the economy of the United States and circumvent the efforts of OPEC to reap windfall profits."
Fortunately, this amendment was tabled before it actually made it into the bill.

In my opinion, it is to George Bush's credit that he is not going to open the SPR to manipulate prices, even if his main reason for doing so is because he thinks that we should drill the Arctic National Wildlife Refuge instead. (To which my nasty side says, "Go ahead. And see how much the American people thank you when you get at most 3 months of oil out of it.")

I think Schumer's on the wrong side of the issue here. I don't believe we should be tapping into the SPR just to give people a little relief from high prices. At best, it's going to make us happy for a couple of months, and then we're going to go right back to the $60+/barrel that we're seeing now. Instead, I think Schumer should be out front pushing for conservation legislation, like improved CAFE standards and maybe even a gasoline tax...(well, the latter certainly wouldn't make him popular.) I'm not sure if Schumer supports dipping into the SPR because he really believes it's the right thing to do, or because it has no chance of passing right now but makes his constituents think he's doing something. I think that at one time he was on the Energy and Natural Resources committee (his website is sort-of ambiguous about his current committee memberships), so he can't be completely ignorant of the issues (can he?).

I'm lucky to live in a state where I typically agree with how my senators vote. But now it's my chance to try to make an impact. I'm going to write a letter to Schumer to urge him to stop supporting legislation that would make it easier to tap into the SPR, but I'd like to get some of your input on the issue. Do you agree with me? If so, what other points should I raise in the letter? Or, if you disagree, why? What would be the benefit in opening the SPR in order to decrease prices?

FYI: Once I write the letter, I'll post it on Peak Oil NYC, but I'll put the link up here too so you can all go over and see it (and steal it to send to your senator too).

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I think this gets back to the relationship, or more importantly the lack of a relationship, between "gas prices" and "peak oil."

People, this senator included, just do not see "gas prices" in relation to resource depletion. I'd say most approach it by looking backwards, to where gas prices have been. They (quite understandably) look at price history and see that gas is sometimes high, sometimes low, and that it’s high right now. The normal expectation (if you don’t think of the game changing) is that prices will 'return' to a low level. The $10 phrase for that is 'regression to the mean' and it is a good default assumption, without any change in fundamentals.

We of course think that the fundamentals have changed.

Maybe "peak oil" is too big a pill for people to swallow, but maybe we can get the simpler idea of "depletion" across and the "long term trend of higher prices" that goes with it.

The long emergency that is coming will require a nice cushion in the reserves. When would Sen. Schumer want to refill the reserves, when Oil is at $80?

Someone needs to point his attention to the long term trend in prices that were stable for almost 20 years and recently (since 2001) have tripled.

Look forward to the letter Ianqui! Thanks for thinking of Peak Oil NYC for your local issues.

What do you think of a sound bite like:
"Our Growing Oil Gap"

or "OG OG" --pronounced Oil Gullly, Oh Gee

It is supposed to convey that there is a "gap" problem,
(between demand and supply rates)
The gap is "growing"
And it's OUR problem

Shumer is just another in a long line of political posers. He can now point to his efforts to open the SPR as positive action taken to ameliorate high gas prices. Look for others to do similar stuff.

But odo is right in his above statement. There is a disconnect in the public consciousness between gasoline and petroleum. Gasoline comes from oil companies and their refineries, and thus the oil companies control gas prices in the minds of the ignorant.

That is exactly what brought about a lot of the hostility in the 1970's towards oil companies. People knew gas came from refineries, and they knew who owned the refineries. Thus it had to be the oil companies jacking up prices. Oil stored in tank farms was used to show they were "hoarding oil" from the people. I watched the newscasts - I remember.

When actual gas station owners tried to raise prices on new batches of gas, reflecting what they were paying for it, people got viloent. There were fights everywhere. Even today, you can no longer find a place that lets you pump first and then pay - you have to pay first because there are already a very high number of "drive-off" thieves. They appeared in the 1970's too.

The big difference this time is that the price increases are not instantaneous, allowing a "mental adjustment" to the new reality. But the anger is still easy to see everywhere, both on the roads and at the pumps.

SPR - this should be left alone as a contingency against any type of embargo or supply disruption, as it was originally intended. It was not built to buffer higher prices for coddled Americans with an over-developed sense of entitlement. It is there in case we ever get denied oil to run the economy.

i don't know man, why is the "prices won't come down for ten years" meme out there anyway? it seems insane to assume "down" in "ten years" but i've seen it a lot, surfing the "gas prices" news.

I remember when Schumer wanted to regulate cereal prices, becuase he felt people just paid too much for their Frosted Flakes.


I agree that the SPR shouldn't be used to manipulate prices. Unfortunately, I truly think it was topped off in anticipation of war with Iran. So, I am conflicted: market signals, viz. prices, will urge a recognition of and action on Peak Oil to a much greater extent that books, news articles, speeches from the floor of Congress. On the other hand, I don't want to see anything that makes easier (even obliquely) another disastrous overseas adventure.

1) Schumer is wrong about the strategic petroleum reserve. The SPR should be left alone until a real crisis occurs -- for instance, a major terrorist attack on Saudi infrastructure, a major war that we are loosing, etc. My only fear is that Bush sees its necessity because he plans on precipitating its necessity.

2) Bush isn't planning on getting thanked by the American people. He's planniing on getting thanked by the portion of his base that will get wealthy from ANWR leases and construction.

3) Schumer thinks he is right from a political standpoint. Assuming his ammendment doesn't make it on the bill, the energy bill passes, and the bill does nothing for gas prices -- he can make the illogical argument that his ammendment could have had an impact. It's sort of like missile defense -- it won't work, it burns up tax dollars like a wild fire, it hurts national security in the long run -- but it's popular with Joe Public. However, I think it is too easy to explain the national security importance of the SPR and Schumer will get burned.

typical gas price articles from around the US:




note the simularity to a weather report. it's just what gas "is" relative to earlier dates.

oh, and a really painful one (it starts out good, but the quotes at the end get pretty unreal):


The free flow of information to an educated citizenry can the antodote to the demagogue.

BTW, the SPR is a necessary asset to our security but did you know that if it was used to make electricity, the uranium and plutonium we're planning on burying at Yucca Mountain would make 10X as much juice? Yellowcake prices have almost tripled in the last couple of years. Where's the liberal outrage?

Also, "rana's" analogy to to missile defense seems dubious. I live on the West Coast within range of North Korean nuclear warheads and a working missile defense, even if not perfect, makes a lot of sense to me.

He does have a little trick to saving on gas, though.

Instead of always using the premium grade that is recommended for the vehicle, he uses mid-grade gasoline.

Oooohhh, quite a trick. Thanks for the astonishing tip, dude.

Whitehall -- My analogy was that missile defense is politically popular inspite of being a bad idea. Since you don't think it is a bad idea, you get to come up with your own analogy. I also live on the west coast and get to see the vapor trail from ICBMs launched from Vandenberg for tests. Each test costs about 2 billion dollars. Countermeasures for hit-to-kill weapons include 100 dollar balloons and million dollar tether systems. Who knows -- maybe the North Korean's can't afford them. For the price of what we are spending on missile defense in one year, we could put have defenses against shoulder-fired missiles placed on all commercial aircraft in the country, double NASA's budget, or double research for curing cancer.

[The SPR] is there in case we ever get denied oil to run the economy.

Or it is there in case we ever get denied oil to run the military. A professor at my school gave a very interesting lecture last winter painting the IEA as a counter-cartel to OPEC with the SPR being the lynchpin: the 90-day supply of oil in the SPR is a statement to the effect of "fine, stop selling us oil on the open market, and see what we can do to you in 90 days."

Well, I agree that if it comes down to it, the military will have first dibs on any petroleum coming into this country, then federal officials, then state law enforcement and so on down the chain. Joe Public is dead last - as usual in anything government sets up. Government takes care of its own first and always.

That "3 months of oil" from ANWR is a pretty strange comment coming from someone who is familiar with the PO scenario. It's not the absolute amount that matters, it's the difference between the levels of supply and demand at reasonable prices. Even a few MB/day can make a big difference once you get these values bumping up against each other. ANWR could stave off a Peak Oil crunch for years, buying time for longer-term solutions.

Very well put, Spooky. This is outrageously ignorant political grandstanding.

Halfin, the "three months" should be read as a stand in for "some short period of time". But in any case, I don't think that's what you're responding to.

You're right that the supply and demand at the time that ANWR oil would come online would make a big difference both in prices and in how much we get out of the oil. However, my snarky remark implicitly assumes that demand would be at least as high as it is today, since that's the kind of world that the Administration is envisioning for the foreseeable future. In which case, the US--if we were actually to be the recipients of all of the ANWR oil--wouldn't get much of a reprieve.

(And of course, we don't really know how much oil is in ANWR, but probably not that much.)

Still, I wouldn't go so far as to say that ANWR "could stave off a Peak Oil crunch for years", at least not at current consumption rates. Which is what my comment is referring to.

Halfin's post makes an excellent point. I want to add that if ANWR development started today, it would still be years before seeing the first drop.

Great thread. Lot's of good points.

I agree that the reason the administration is filling the reserve is security related. It is an insurance policy against action Iran or Venezuala may take. Iran's recent bluff-calling highlights this. They hold more cards than Europe does. The reserves allow the US to feel the pain of any plan to hold oil off the market later than the rest of the world. (and maybe do something about it in the meantime). That's the idea at least.

I agree with Ianqui about ANWR. it seem to me that no one really knows how much oil is in ANWR and the oil companies haven't been as excited as the politicians about drilling there. I don't think it will change our oil supply balance and I don't think anyone is going to get rich from it.

As to knowing how much oil is in unexploited areas, such as ANWR, I was recently in Bodega Bay, California and visited the marine laboratory there. The science people at the lab were joyous over the establishment of a marine sactuary off the coast. In discussions during the open house at the lab, I asked just how much oil and gas might be there since that would factor into my decision to support or oppose.

They didn't know.

So I went home and researched the question via Google. No one knows! It turns out that many don't want us to know - a controversy in the Energy Bill was between those who would do an official "inventory" of offshore oil and gas and those who didn't want to know. The latter were, of course, opponents of offshore oil and gas drilling.

Is there a risk/reward curve for drilling in "sensitive" areas? If offshore California (or Florida) had huge resources, would that support or refute drilling there?

My conclusion is it doesn't matter - as a matter of public policy. If there is little resource, then commercial drilling will be short-lived and non-intrusive. IF there is huge resources, then the intrusion would be larger but the motivations and rewards would be larger too.

Ultimately, what's needed is regulation of drilling intrusion and spill risks. Given the track record since the Santa Barbara channel era, I support opening almost every area in the US to exploration and drilling.

Of course, there is a PO argument. What you don't extract now will be more valuable later so let it sit until our grandchildren are really desparate.

In your letter to Senator Schumer, I'd tell him high gas prices are not an emergency but a new permanent way of life --given oil depletion and oil demand-- and that he should be looking at the larger picture, which is very serious and is not going to go away.

You could point him to peak oil --I wouldn't assume that he knows about it, or doesn't; I'd just sketch the basics, and direct him to, say, Bartlett's speeches, and/or any web site with a good basic introduction.

I agree that it's foolish to draw down the emergency reserve and then have to refill it at $80. It should be saved for a REAL emergency (whatever that is), and not be used to temporarily ease at-the-pump prices.

Finally, you could appeal to his 'urge for greatness' by saying that any major political leader who begins to bite the bullet on peak oil will one day be regarded with admiration and gratitude for what he/she did.

Every "Collapse-capable Civilization" has limited resources, be it Rome, Easter Island, or the USA.

WE have a limited amount of person-power. We have limited time and limited energy.

By investing all of these non-renewable resources toward developing an unsustainable infrastructure, we are edging ourselves ever closer to the lemmings' ledge.

The "invisible hand" of the free market is incapable of seeing this big picture. It continues to mindlessly claw its way towards maximized profit for the number one. It is only by using our intelligence and abstract reasoning powers, that we as human beings can visualize the machine driving itself mindlessly towards the ledge. That is what Schumer and other "Ledge-us-laters" need to be brought to understand.

In Jared Diamond's best seller, "Collapse", the people of Easter Island drove themselves at ever faster fenzy to cut down the last remaining trees so that they can have the biggest monument to show off on their version of Stone Wall Street.

A really excellent visual presentation of this concept can be found in Chapt. 5 of Robert Bériault's power point slide show at http://www.peakoilandhumanity.com/

Given your interest in oil, you might want to check out an essay submitted by a man named Mario Mercado for my Ruminations on America project, which offers a platform for people to share their provocative, insightful views on the current state of the union and true American core values, www.ruminationsonamerica.blogspot.com. I would like to invite you, and any of your readers who are inclined, to consider participating in this experiment.

Perhaps I'm blinded by my addiction to taking the long-term view, but I can't get very interested in what happens with the SPR. Once the oil crunch hits (see below), the SPR will prove to be far too small to make any real difference. And once it's used, oil will be so expensive and supply so tight that it will be a serious hardship to refill it.

By oil crunch, I mean the time when supply is seriously and permanently constraining consumption. This could happen either pre-peak or post-peak, as it's a function of the rates of consumption and production. While i still side with ASPO about 2007 being the year we hit the peak, I think there's a reasonable chance that the crunch will begin to hit in 2006, with production rising very slightly between 2006 and 2007, but not as much as demand, resulting in an increasingly tight market.

Opening up the SPR wouldent change the global price that much only 20% of it is sweet light the rest is heavy sour which the Saudis cannot give away currently $13 dollars cheaper. Thats because there is no more refinery capacaty for the heavy grade. Also refining heavy oil you loose 20%. In effect making the spr smaller. finally it takes tankers and pipelines to ship this oil around all of which are currently being used. Simmons and co did a report on the spr a couple of years ago it is well worth reading.

ANWR would come online in about 5 to 6 years if we started to develop it today. That's about 2010 or 2011. From the American Geological Institute as of 1998:

In assessing the amount of oil, scientists used basic geology, recovery factors, and costs to determine economically retrievable resources. From this analysis, geologists discovered that the recoverable oil is not uniformly dispersed in the 1002 area. The amount of technically attainable petroleum resources ranges between 4.3 and 11.8 BBO (95% and 5% probablities). This estimate exceeds earlier calculations because of the improved resolution of the reprocessed seismic data. Furthermore, the USGS concludes that 2.4 BBO are economically recoverable at $18 per barrel, while 3.2 BBO are economically recoverable at $20 per barrel. No oil is economically retrievable at a market price less than $15 per barrel.

Assuming the geology hasn't changed in the last 7 years (a safe bet, I think), let's compromise (on the upward side) and say that 9 BBO (billion barrels of oil) are recoverable under current prices--by the way, the big oil companies have little interest in ANWR. That much oil would meet current US demand for 435 days spread out over some number of years depending on the daily production. Compromising on the upward side again, let's say that's 20 years. That would amount to 22 days a year over those 20 years at current demand rates with two optimistic assumptions figured in.

Why don't we just try to double CAFE gas mileage standards to about 42 miles/gallon and leave ANWR alone--or for future posterity?

Oil companies are not hot for ANWR for several reasons:

1) Every rabid environmentalist in North America will be trying to find something to drag them into court.
2)As it is, most of ANWR falls into the 'wetlands' category, which means if you truck it in, you truck it out. If you build it, you unbuild it later. Makes for a high operating cost and remediation cost.
3) There is no local infrastructure to make this inexpensive - it will have to be built. It is easier to find more oil elsewhere with collateral infrastructure.
4) There is no "giant" structure acording to the seismic survey. This means that there will need to be a large gathering facility installed for these disparate fields.
5) Bear in mind that seismic only shows the presence of oil or gas, not the amount. Oil companies often drill into these seismic "bright spots" only to find the oil has moved on elsewhere, or there is not enough to justify commerciality. This happened several times offshore Florida before the ban - big seismic possibilities but no oil bonanza - just trace (Tenneco around 1989?)
6) Pipeline - there ain't one - and this will have to be another Alyeska type, and very expensive.

People will go there, but it will not be a stampede. And they will make sure that the costs are defrayed as much as possible via partnerships before anything begins. Let there be one or two dry holes in the first few stabs and it will all cool quickly...

ANWR has all the makings of a tempest in a teapot (now watch the first well be the last giant field...) ;)

Those of you interested in the ANWR issue should also check out the series on trigger prices for ANWR drilling at Environmental Economics (here and here).

On the other hand, I didn't mean to get you sidetracked. Discussion about Schumer and the SPR is still being solicited!

Ianqui, ANWR was more interesting to me. Schumer is an asshole. We need that SPR now more than ever so we have a few weeks of happiness when the geopolitical shit hits the fan.

By the way, why isn't Schumer interested in oil company (ExxonMobil, Chevron, et. al.) windfall profits, not just OPEC windfall profits?

Show me a modern politician talking about energy issues (outside the soon-to-be-canonized Roscoe Bartlett) and I'll show you an opportunistic, narcissistic jerk.

Schumer is an idiot, for reasons too numerous to mention.

I think it's silly to talk about doubling vehicle fuel economy.  That's thinking much too small; the PNGV cars were aiming for 80 MPG, and at least one of them hit 72 MPG at a price $3500 over conventional construction.

Make a PNGV-style car which can drive half its mileage on electricity from the grid, and you've just gone from 27.5 MPG to 144 MPG.  If we had cars like that on the market today, the current spike in crude prices would be a non-event.

Even with the USA, SPR it has what I have read almost 1 billion bbls of reserve.Lets do some math...
The USA uses about 8 billion bbls a year of oil.
The USA has 25 billion bbls of oil left it its field.
ANWAR may add between 3-10 billion bbls. Most say 5 billion
OK lets say the USA had to use only its own oil to feed and keep stagnate to where it is today.
With the SPR , ANWAR and its fields the add up would be about 32 billion barrels of oil. USA uses 8 billion barrels a year....thats 4 years present consumption...then Empty.
I dont think the SPR will help too much in the long run...short term it will be used up to appease the masses only to result to a bigger problem in the future. By the time ANWAR comes on-line around 2012 earliest...I think oil will be well over 100 bbl. it will do little to soften anything.

Dearest Dave,

As to your rhetorical question:

"Show me a modern politician talking about energy issues (outside the soon-to-be-canonized Roscoe Bartlett) and I'll show you an opportunistic, narcissistic jerk."

Surely you haven't forgotten Senator Pete Domenici, chairman of the Energy committee? That there's a standup guy. Even his Democrat co-chair, Jeff Bingaman is OK. Of course, both are senators....

The guys who really, really get it are Bush and Cheney. These men are the leaders we've needed for decades.

But in general, I have to agree. Most politicians haven't a clue but my two least favorites are Barbara Boxer and Jiimmy Carter. Fools both.

Whitehall:  Perhaps you would like to explain how BushCo's promotion of the unworkable, suppression of the feasible immediate response, and legislative quashing of an excellent program to deal with the issue because it was begun by the other party (PNGV) constitutes "getting it".  Go read and comment... if you dare.

Oh, and since they're such experts about oil, why didn't they see this coming?

EP -

Loved your "Treason" bit. They (presidents) have all gotten the "Hubbert" data since it was commissioned in their initial briefings upon taking office. There is no doubt - they each knew where we were ultimately headed.

Now all you need to do is throw in the actual murders and deaths these policies have caused, and maybe the American people will connect the really bitter taste in their mouth with the source. The rest of the world already knows what is going on, but are powerless to stop it, even China, for now.

Here's hoping the people deliver an angry figurehead to unite some of the disparate groups and change things...


Sorry, your link was unconvincing. Why build a high milage car that people won't buy? These guys represent the voters and they can't get too far ahead nor can they force solutions down the voters' throats. I loved Cheney's remark "Conservation is a moral virtue." It can't be effectively imposed.

Given their political constraints, I think they are playing the game well. They (like Bush 41) are ensuring that Persian Gulf oil is sold into a free market rather than being consolidated into the hands of a tyrant. They have supported increased exploration and drilling domestically. They are strong proponents of nuclear power (note self-interested position here). They believe that our free people and free markets will make the necessary, legitimate decisions.

It's called democracy.

One unfortunate tendancy I observe in the Peak Oil crowd is an inflation of the negatives to justify giving power to "the wise ones." That is a route to dictatorship, at least of the bureaucrats.

Whitehall, I notice that you don't touch the question why BushCo. pushes hydrogen (probably unworkable before 2025, and perhaps uneconomical due to inefficiencies even then) instead of gas-optional hybrids which we could build now.

This may be news to you, but the price crisis is NOW, not 20 years from now.  Near-shutdown of the auto industry is a price-blip away.  People weren't interested in 80-MPG PNGV cars in 1998, when premium was selling for under a buck.  Those days are gone.

BushCo. should have known that they were going, and approximately when.  Instead of keeping those things on the back burner so we'd have the capability when we needed it, the program was killed.  It was due to deliver prototypes last year and product in 2008-9.  Do you seriously suggest that people wouldn't be interested NOW?

I'll bet that if Daimler-Chrysler could make 100,000 of their 72 MPG PNGV cars at the $3500 price premium projected in the 2001 news reports, they could sell every one of them.

Whitehall writes, "It's called democracy." I hope to God I never find myself in a "democracy" where "our free people and free markets will make the necessary, legitimate decisions". This is such a simplistic view; I doubt any serious student of democracy, capitalistm, politics, or American society would subscribe to such a simple view. The simple fact of people buying SUVs in such huge numbers despite their environmental impact has been a shock to me, and every day I work to try to absorb the meaning of all this - how do people really think and what should I think of my fellow American's intellect and sense of responsibility for the environment and so on. Free people strongly influenced by extremely well-done advertising as well as their sense of fashion - wanting to look good - will make all kinds of idiotic decisions. That's democracy.

So you suppose that "I'll bet that if Daimler-Chrysler could make 100,000 of their 72 MPG PNGV cars at the $3500 price premium projected in the 2001 news reports, they could sell every one of them."

Well, Daimler-Chrysler management placed their bets and took their chances. Toyota and Honda played a different game and are selling hybrids. Now, Ford and others are jumping on the bandwagon and offering hybrids too. That's capitalism - make some money and others will copy.

For you Mr or Ms Retro, perhaps you would like to emigrate to North Korea or Cuba? Because if you live in the USA and advocate taking away our freedoms, you are going to see some pushback.

As to the folks buying big SUVs, it is their money. If they soon can't afford to run them, that's their tough noogies. Remember the rush to buy diesels in the '70s? I laughed at them then because of their political correctness getting in the way of sound purchasing decisions. Today, wait untill all those Prius's need new batteries!

As to hydrogen, it has a fair chance of working. I know I've been looking at it for over 20 years so if I were DICTATOR, we'd have it already. I guess the message is that Retro or Engineer-Poet can't be dictator, but I should be.

Take Home Message - play it like it lies.

Whitehall:  The life test results on the Prius so far indicate that the traction battery will likely last the life of the vehicle; at least two Priuses have gone well over 330,000 km in taxi service without battery replacement.

"As to the folks buying big SUVs, it is their money."

They don't pay the costs of defending the oil routes at the gas pump, nor the cost of defending against the fanatics the oil money goes to.  That comes out of income taxes, which is MY money.

If each gallon of gasoline (and diesel, and jet fuel) was taxed enough to pay for the DoD and Homeland Security costs associated with it, I wouldn't have a problem.  Of course, that would put gasoline at $4-$5 per gallon and the SUV segment wouldn't exist.

If it needs subsidies that big, it probably shouldn't exist.


You keep wondering over and again how the humanoids around you perform this activity you refer to as "think".

Well the evidence is all around you.
You need to become perspicacious (keenly aware and discerning).

The humanoids are constantly bombarded by messages.
They accept some of these inputs and reject others.

Inside their heads, a number of processes simulataneously chew on the various aspects of the received messages. Messages have a visual part, a phonic part, a logic part, a touchy-feely part and so on.

Companies that advertise various consumables to your fellow "American" humanoids understand how the different mental gears churn. They spend a lot of time researchng to discover what knid of "mixed messages" will get through to all the different mental gears inside of each person's head.

We Peak Oilers do not have this kind of advanced research capability available to us. That is why we do not know how to get the Peak Oil alarm signal out there into the "Hearts and Minds" of our fellow countrymen (and women).

Hey wait a minute. Did he say hearts AND minds? what the heck does the mean? why do they always say that? don't we each have just one mind? are we not each a wholisitc person? i'm confused. time to watch bill o'rielly. he never spins my head and puts me off balance. ;-)