Marshall Swing: US Gov’t Stockpiling Oil to Withstand Complete Systemic Collapse in Fall 2015?

by Marshall Swing, Silver Doctors At 397.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. What it appears has been going on now since at least October is the United States government has been purchasing hundreds of millions of barrels of oil and storing them. The maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, so it would take over 160 days to use the entire inventory. 160 days. That might be just the amount to time required to operate efficiently during the world’s greatest economic collapse EVER and during its aftermath- while the rest of the world recovers from the depths of despair and chaos, death and destruction, when after 3 days all their food is gone from their store shelves and there is NO TRADE since all currencies have failed and it takes months for world leaders to convene and agree on a one world economic system going forward. Silver is below $18 and anything below that is my announced buy target but as we go into February, I am changing my guidance. I now recommend buy with total abandon, not waiting, on all precious metal, particularly silver, even if price goes to $20 or higher as time is limited before the great, planned crash. Get physical while you can. Something’s gotta give! Just when you thought things could not get any worse, suddenly, there are daily articles of planes in the United States getting bomb threats from unknown attackers and planes are diverted, Air Force fighters are scrambled and business as usual has become very suspicious, to say the least. Can we start preparing for a new round of government controls and billions of dollars of orders for bomb detection machinery to ensure flights cannot possibly have bombs or other weapons of mass destruction on them? When we talk about the airlines, they are part of what is known as the Dow Jones Transportation Average which is 20 transportation stocks: http://en.wikipedia.org/wiki/Dow_Jones_Transportation_Average Much research has been done and major indicators claim a rise in the DJTA is an excellent predictor of where the DOW is going to go in the future. Here is a comparison I took last week of both: Obviously, if the DOW catches up to the DJTA, then we are looking at huge gains on the DOW! Is that possible? Well, if you have been a reader of Martin Armstrong, then you know he has predicted this scenario is very possible. Notice this massive gap between the two averages has occurred in only 3 months. It might appear to most to be due to low fuel prices made possible by the same drop in oil price that is killing shale oil companies and all their associated infrastructure and the loans those companies, and related/ancillary businesses and the towns and states that support shale oil drilling are responsible to pay back whether they can take another drop out of the shale profitably or not! Obviously, companies and industry that benefit from low oil costs could also be counting their chickens before they hatch. So, what about the oil situation? The mere fact that low oil prices kills everything dependent on high oil prices is one thing but we see articles in the main stream financial press talking about the drop in oil prices being due to lower demand but we here at SilverDoctors know this is also a lie because SRSRocco did a great piece of investigative journalism and blew the lid off the notion of lower demand theory: http://www.silverdoctors.com/record-global-oil-demand-even-as-the-price-of-oil-declined/ I checked in on my friend SRS the other day and we caught up on old times and then the subject drifted to oil and he made me aware of something I had not thought of related to oil demand and where all that oil is going and we postulated the “what if…” oil has nowhere to go idea? After that conversation, I tried but found it impossible to resist checking into storage of oil in the United States and found that oil is stored in strategic reserves both commercially and more importantly via the U.S. Government.

It was not easy to find exactly the storage capacity of both those reserves but in several articles and documents I was able to piece it together.  This article tells us the current level of commercial reserves but does not tell the capacity: http://www.bloomberg.com/news/2015-01-22/u-s-doe-weekly-petroleum-status-report-for-jan-16-text-.html

This article gives the capacity of commercial reserves: http://www.reuters.com/article/2015/01/12/us-oil-tanks-analysis-idUSKBN0KL0AZ20150112

From the Energy Information Administration we get the weekly breakout but they very judiciously do not give total capacity or percentage full information.

I got the SPR government reserve information from here: http://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_%28United_States%29

And a little math told me the SPR was 95% full on December 23rd.  A little more math told me the commercial reserves were 90%+ full at the January 16 report.

http://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf

All this beckons the question of the 800 lb gorilla in the room “What happens when the commercial and government reserves are completely full and all this oil has nowhere to go ?

SRS didn’t mention but I was instantly reminded of an old song sung by an old pal of mine: https://www.youtube.com/watch?v=lkzO44VaUB0

Franky does a good job on this!

“Something’s Gotta Give”
When an irresistible force such as you,
Meets an old immovable object like me
You can bet just as sure as you live

Something’s gotta give, Something’s gotta give, Something’s gotta give

When an irrepressible smile such as yours
Warms an old implacable heart such as mine
Don’t say no because I insist

Somewhere, somehow, Someone’s gotta be kissed

So, en garde, who knows what the fates might have in store
From their vast mysterious sky
I’ll try hard ignorin’ those lips that I adore
But how long can anyone try?

Fight, fight, fight, fight, fight it with all of our might
Chances are some heavenly star-spangled night
We’ll find out just as sure as we live

Something’s gotta give, Something’s gotta give, Something’s gotta give

Fight, fight, fight it with all of your might
Chances are that some heavenly star-spangled night
We’ll find out just as sure as we live

Something’s gotta give, Something’s gotta give, Something’s gotta give

Something’s gotta give, Something’s gotta give

Aww, let’s tear it up!!

 

Remember, the Bloomberg article tells us the SPR reserves increased by 10.1 MILLION barrels in just one week’s time!

“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.1 million barrels from the previous week. At 397.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.

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