Insert Words, Chew Thoroughly
Yesterday I wrote that the Senate bill to halt the addition of oil into the Strategic Petroleum Reserve had zero chance of being signed by President Bush. Based on his prior refusals to even discuss the issue I thought he would drag out the veto pen and send the bill into oblivion.
In politics it is always amazing to watch the opposing sides change direction on a dime and do exactly what they were fighting against just a few days before. Apparently lawmakers are getting so much heat on the high gas prices that the token gesture of halting the 70,000 bpd flowing into the SPR was an easy decision. The Senate voted 97-1 to suspend deliveries and the house passed a similar measure by 385-25. With that kind of lopsided support the president had no choice but to sign the bill when it reaches his desk.
If the president vetoed the bill there were more than enough votes for it to override any veto. Therefore whether Bush wanted to sign it or not he was left with only one alternative. That is spin the event into a positive sound bite and sign it to crush those dastardly high gasoline prices. This is where I would be eating my words from yesterday if they were actually written on paper rather than digital ink.
Of course the 70,000 barrels currently going into the SPR will have zero real impact on gasoline prices.
A 42-gallon barrel of oil actually produces 48.43 gallons of refined products. The heavier oil is broken down into its lighter components and you actually get out more volume than you started with. Of those 48.43 gallons of refined products there are only 24.89 gallons of gasoline. Doing some quick math 70,000 barrels of oil will produce 1,742,511 gallons of gasoline or 41,488 barrels of gasoline per day. That sounds like a lot.
However, over the last week the U.S. gasoline consumption as reported on Wednesdays by the EIA was 9,343,000 barrels per day. The extra gasoline that could be produced by the oil previously destined for the SPR only accounts for 0.004441% of our daily consumption. We burn 9.343 million barrels of gasoline and adding 41.4 thousand is only a drop in the proverbial bucket or in this case a gas tank.
This entire SPR argument was a waste of words but I am sure millions of Americans are sleeping better tonight because we are no longer filling the SPR. If everybody combined two shopping trips this week into one outing we would save far more gasoline than we gained by the SPR bill. It is all a matter of perception and consumers are sure it is big oil companies gouging tax payers with high oil prices with the blessing of the government. Just like their belief in the Easter bunny and Santa Claus this oil myth will also turn out to be untrue.