Can drivers expect any relief?
Wednesday, April 30th, 2008
By Staff
Relaxing sulfur and ethanol standards are two proposals that could ease prices
WASHINGTON - President Bush lamented Tuesday that there is no magic wand to wave to lower oil prices, but there are simple steps he could take to lower the soaring price of crude. Here are some answers to questions about making oil cheaper.
Q: Bush said, "I think that if there was a magic wand to say, 'OK, drop price,' I'd do that. … But there is no magic wand to wave right now." Is there nothing he can do?
A: One step that could have an immediate effect would be to fill the Strategic Petroleum Reserve with heavier, sour crude oil. Right now, the reserve is being partially filled by light, sweet crude, which is lower in sulfur. This is the variety most sought after by refiners, and taking it off global markets and putting it into the reserve makes it more scarce, and thus costlier. About three-tenths of a percent of global supply of light, sweet crude is being diverted to the SPR.
Q: What would this switch achieve?
Philip Verleger, a noted oil industry analyst, thinks this move could help lower the price of gasoline, and diesel fuel could fall by $1 a gallon.
Q: Why would switching what goes into the reserve make a difference?
A: The heavy crude oil sells for a lower price globally, so this makes economic sense. And it makes more light, sweet crude available and thus cheaper. (more…)
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