Watch out for the coming oil shock in the USA

This just in from Ian Welsh.

Recently read a smart lad who noted a few simple things:

  1. Biden’s been releasing oil from the Strategic Petroleum Reserve (SPR).

  2. The SPR has basically two types of oil: sour and sweet.

  3. Biden has been releasing almost all sour since that’s what most US refineries need.

  4. At the current rate of release, the SPR runs out of sour crude to release around March.

[snip]

Of course, when Biden stops releasing oil, either because he’s out or because he chooses to stop after the election or the holidays are over, then prices are going to spike if sanctions are still in place against Russia and/or Russia is unwilling to sell to the West.  As a bonus, the government will need to buy oil itself to stock the reserve back up.

[snip]

What this means for Americans is that there’s a very good chance of a big inflation spike after the election.  It might hold off for as long as spring, it might start a few weeks after the election.  It won’t just hit gas prices, oil is important for much more than driving cars, so it’ll rip through the entire economy.  Stock up on what you need before the election if you can.

And let this be a lesson that GDP means very little when the chips are down.  Who cares if you have Hollywood and lots of fast food stores and Google and FaceBook?  What matters is what you grow, dig up, refine and make.

Javier Blas of Bloomberg News suggested President Biden could make up the different by getting Saudi Arabia to pump more oil, but Biden’s attempts to get Middle Eastern “allies” to help out by increasing oil production have ended in failure.

LINKS

When Is the Next Oil-Driven Inflation Spike in the US?  December to March by Ian Welsh.

“We’re going to have to talk about oil again” on Quiz Chad Had a Rack Twitter thread.

The US Is Depleting Its Strategic Petroleum Petroleum Reserve Faster Than It Looks by Javier Blas for Bloomberg News.

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One Response to “Watch out for the coming oil shock in the USA”

  1. Eric Says:

    Reblogged this on Calculus of Decay .

    Like

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