As the country debates President Clinton's decision to release 30 million bbl of oil from the Strategic Petroleum Reserve (SPR) and we wait to see what effect, if any, it will have on heating oil prices, it might be worthwhile to take a look at what may happen a year from now.
The release of oil from the SPR was arranged as a swap, which means that next year that oil will have to be put back into the SPR. The only extra production capacity of any importance is with OPEC, some 2.5 million b/d. However, with present world consumption at 76 million b/d and growing at 1.5-2.0%/year, next year growth alone will consume a large part of OPEC's surplus capacity. Where will we get those 30 million bbl to put back, and at what price?
Raymond R. Knowles