Oil crisis, US could start tapping into the strategic reserve

Dow Jones reports: "White House Chief of Staff Bill Daley said on Sunday the Obama administration is considering tapping into the U.S. strategic oil reserve as one way to help ease soaring oil prices." Speaking on NBC television's "Meet the Press," Daley said: "We are looking at the options. The issue of the reserves is one we are considering. ... All matters have to be on the table."

SPR has a capacity 726.7 million barrels, the SPR holds a 34 day reserve at the US daily consumption of 21 million barrels. The picture is slightly better when considering that the US only imports 12 MMbd, meaning there is a 58 day supply. But the biggest issue that nobody is considering, is that the maximum total withdrawal capacity is physically limited to just 4.4 million barrels per day. In other words, should the MENA escalation flare up, there is no way to physically replace all the lost output. Yet what is most troubling is that even as the US is about to start using up its reserves, Asia is actively shoring up its oil, meaning that as our own oil buffer gets ever smaller, Asia could easily dictate economic terms over the OPEC cartel as soon as a few months from now.This is a last ditch attempt at preventing all out desperation at the oil pump as gas now moves solidly into $4 territory across United States and it clearly indicates that all the recent guarantees on how Saudi Arabia would compensate for missing supplies is just publicity stunt, Saudi Arabia cannot ease prices and does not have the spare capacity needed to replace missing North African supplies.
In the meantime, China will start work on building strategic oil reserve tanks at the north-eastern port of Tianjin by May, China Daily newspaper reported Saturday. Work will be completed before the end of China's 2011-2015 five-year economic plan, and filling this reserve will start when the oil price is "appropriate", Tianjin city official He Shushan was quoted as saying. China's efforts to build up oil stocks are closely watched by energy market analysts, as its demand for oil is a key driver of global prices and huge amounts of crude are needed for the project. China imports more than half the oil it uses.