As most of you already know, the White House announced this morning that the USA would be releasing 30 million barrels of oil from the strategic petroleum reserve. This action is coming in conjunction with other countries that are releasing a similar amount. The oil will be sold on the market at the rate of two million barrel per day for thirty days.
The purported reason for this move is to make up for the Libyan production lost due to the current fighting. Of course, that is fighting that began months ago and production that has been lost for that entire time. Indeed, the move to release the oil could have been done three months ago. Again we are told that the delay in moving forward with this plan resulted due to the time needed to get all of the participating countries on board with the plan.
This is nonsense. The USA could easily have released the same amount of oil from the reserve months ago. While the US effort proceded, we could have worked with other countries to take up the slack once our part ended. There was no conceivable need for the delay. Instead of moving forward when the oil shock hurt the world economy, Obama waited. Now, however, the price of oil has been coming down. It has fallen nearly 20% from the interim high of a few weeks ago. So with the price down, it is only now that Obama is acting. Oil that is there for emergencies will be released now that the emergency has passed.
So why is it that Obama has finally acted? My guess is that now that oil prices have declined, Obama wants to try to get some credit for himself from that move. The result is a very cynical release of the oil from the reserve so that Obama can give a speech and say "Look what I have done!"
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