How much money are we losing on the strategic oil reserve?

We have spent a lot of money on the strategic oil reserve. The reserve has been around since 1975. What have been the interest costs alone in for the money used to buy the oil? "As of May 31, 2011, the current inventory was 726.5 million barrels. This equates to 34 days of oil at current daily US consumption levels of 21 million barrels per day." Suppose that we sold the 726.5 million barrels at $90 a barrel. That comes to a value of $65.4 billion. At 3.5% interest with continuous compounding, the principal doubles every 20 years. At 5%, it doubles every 14 years.



Blogger drjim said...

Just curious, but you seem to imply we do not need *any* petroleum reserve?

12/09/2011 9:27 PM  
Blogger Dedicated_Dad said...

Without it, we're at the utter mercy of the Musloids and their fellow-traveller Demmunists.

We need the strategic reserve.

That said, I'd have NO problems with the .gov buying MORE when it's low and selling when it's HIGH!

12/09/2011 10:21 PM  

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