I hope someone in the White House proposes a more free market approach to the oil price free fall. Here is my idea. I do think a strategic reserve has some appeal BUT I think a sounder idea would be to let the private sector use it as storage. Charge a small fee i.e. a percentage of realized profits when the price comes back up based on some reasonable price level. Say $20 BbL and then fix a price they must start selling at---say $50 Bbl. Only fully American owned compan...ies should be given this option and not BPS, EXXON etc. Who gets allocation of storage capacity should be based on 'bids' over that fixed price with the concept that all charges are put off into the future. The oil companies will not be made whole by this since they are forgoing current revenues for future revenues. Even with that only those with the cash flow to weather this or ability to reduce their "burn rate" would likely make it. Although possibly you could get loans or speculators to invest in your new ready to go reserves. The shake out will be painful on those who don't. However, we don't crater the whole industry and threaten US energy independence. Not being dependent on the Middle East and Russia for oil should be a standard American defense strategy. Consider the effect on other energy dependent industry and the consumer. If we allow a free fall collapse there will be a period where demand is restored but will have to wait for supply to catch up with it. Once you shut in a well you just can't reopen it. Normally I am for a totally free market but this abnormal event creates the need for abnormal approaches. The consumer---and industry--- will get whipsawed by the effect beyond any normal market adjustment. If you allow the companies to store and then to sell when it hits a certain price you will take much of the dip and rise out of the oil market. Reasonably stable energy prices will do more for a full economy than any other single thing they can do. A big plus is it has no cost to the taxpayer unlike buying for the strategic reserve.
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