http://money.cnn.com/2014/10/24/news/u-s-oil-reserve/index.html?iid=SF_E_River
This article brings up the debate that the U.S. could be holding too much oil in reserves, as opposed to putting this oil into the economy. The U.S. now has the largest emergency reserve of oil in the world and some people think it would be better off in use since we are on track to surpass Saudi Arabia as the world's largest energy producer. Personally I think this excess reserve could be good for the economy since oil prices are already so low. Lower gas prices give people the condfidence to consume more which boosts GDP. If we have a large backup of oil then perhaps if there is some sort of shock to oil production abroad which causes prices to rise, we can dip into our reserves to keep our supply equal to demand so that prices don't rise here. This would keep prices low and continue the trend of boosted consumption, thus boosting GDP even if the amount is miniscule. We learned in class how much a small percentage change in GDP growth can affect future GDP, so if these reserves could give a buffer to rising oil prices elsewhere perhaps it could pay off in the long run.
I agree that the excess reserve is probably beneficial for the economy. Or if they are going to decrease the reserves, it would make more sense to at least wait until prices begin to rise again. There is no need to increase the supply of oil now while the prices are low.
ReplyDeleteI agree. If it's not broke don't fix it. Prices are low right now and purchasing gas or oil is not the burden it was months ago. We should continue to hold those reserves until we really need them or when prices rise too high.
ReplyDeleteI agree with your statement. Currently the U.S.'s oil production is through the roof, and that is driving the price of oil down. We should definitely to continue to keep our oil reserves in reserve since releasing it would seriously hurt huge oil companies like EOG. When we see a decrease in oil production we should just release some of our oil reserves into the economy to keep prices at a low and thus drive consumer spending.
ReplyDeleteThe oil reserves are great to have for the US. They're there to protect the US economy and other beneficiaries from failing if the world supply can't keep up with demand. It's true that US has great deal of oil in reserve but the US can't completely depend on these in the future. Our economy consumes far too much to solely depend on our own. I would recommend that we stay on the current course and continue to save while we can.
ReplyDeleteI believe we should keep the oil reserves where they are because there's no need to put excess oil into action. Maybe when the prices one day surpass a record high then we should consider this tactic but with knowledge of where our gas prices are now just doesn't call for the government to reach their hands in the reserves.
ReplyDeleteI agree with Tyler. There is no need to put the reserves in circulation because the oil prices are low right now. If the prices rise to an all time high then that would be a good time to tap into the reserves in an effort to lower the prices again.
ReplyDeleteI like the idea of us having a large oil reserve. You bring up a good point, if something would effect the market that could reduce the production of oil. we would have nothing to worry about for awhile. With the prices already so low I don't see a need to put the reserves in circulation.
ReplyDeleteI also think it's a good idea to keep our reserves where they are at. By having a nice safety net it protects gas prices, helping consumers greatly. This allows consumers to spend their money elsewhere, helping the economy even more. The only reason to get rid of some of our reserves is if we have an excess amount beyond a normal level. But right now reserves are at a good level.
ReplyDeleteI agree with Anna Eames on decreasing the reserves when the prices rise again. At the same time, prices are going to continue to trend upwards over time while no alternative energy source is available, and from a military standpoint saving as much as possible could prove beneficial.
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