If I have to pay you ten dollars for a hat, and you owe me ten dollars, should I take the hat, and should you give me the hat?
NO, I should not take the hat, I should take the ten dollars, and then negotiate a price for the hat. Either buying it from you at the lowest price you will sell it for, or buying it from someone else who will offer me a better price. In fact, I should take the ten spot and buy a hat for as little as possible.
YES you should give me the hat. If you are selling it for ten dollars it should be costing you less than 6 to produce.
THIS IS WHAT IS HAPPENING WITH THE STRATEGIC OIL RESERVE.
Every Barrel of oil pumped from domestic wells pays a royalty to the government. This royalty is a percentage of the MARKET VALUE OF THE OIL. But, one supplier may be selling for 8 dollars and another for 12, and the market value is 10.
http://www.huffingtonpost.com/raymond-j-learsy/our-stra...oleum-r_b_40527.html
Read this, it is much more clearly stated than my poor skills could hope to.
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