On American Energy Strategy Post-Hormuz

So Vijay, I honestly think that you're looking backwards.

It has put a color on it that didn't exist at the time.

So you should remember the IEA was created.

And part of the IEA is the

agency, of course, in the wake of the Arab embargo in 74, if I recall.

But part of the rationale for the IEA was to have the IEA countries create strategic stockpiles.

And they could be done either by mandating that the private sector held what had to be held, or it could be done by building a strategic stockpile.

In those intervening years between what happened in 74 and what was happening in 1980, there were no strategic stocks built.

And the reason there were no strategic stocks built was that there was no room to build those inventories because the markets turned out to be fairly tight.

So the effort at conservation was an effort to do something instead of there being a strategic stockpile globally.

We didn't have all the tools in the toolkit yet.

Yes, so therefore the plea, and that plea wasn't working, so military force had to be also part of the arsenal for dealing with another change in

the structure of the oil markets.

Okay, that's fair.

Thank you.

We'll come to how this has been changed over time, and I take your point about not looking at history through the rearview mirror, as it were, but...

From the perspective of these strategic stocks and the role of the IEA, maybe Kevin, if I can come to you.

You look at markets very closely.

Your analysis is one that I look at first when I want to understand what's happening with oil markets, with electricity markets, Venezuela, the recent deals and so on.

So you understand this quite deeply.

Can you tell us What has been the impact now that the world in subsequent years, the OECD countries that were the only ones eligible to join the IEA by statute initially, although now there's some affiliate members, keeping these 90 days worth of stock cover with the products or in salt caverns in Louisiana or the Europeans now have diesel stocks that are suddenly in the news, right? Suddenly there's diesel.

Oh, hey, that's very interesting for America in an election, isn't it? Can you tell us what's the status of these strategic petroleum reserves now? What role have they played in the current crisis? And in particular, take us a little bit into the weeds on some of the product issues that are in the news with diesel.

Sure.

The

strategic reserves role as a supply buffer is really a bad replacement for flowing barrels.