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Oil from the reserve: was it an emergency or just politics?

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The president's decision to take 30 million barrels of oil from the nation's Strategic Petroleum Reserve has had, most analysts agree, no measurable impact on (1) gasoline prices, which were already declining in the wake of slackening demand following the Japanese tsunami and the tanking of the world economy, or (2) oil supply, which has remained relatively steady despite the loss of Libyan oil, supposedly the reason for the release.

Well, just curious, just thought I would ask: How have you spent all the money you’ve saved on gasoline this summer as a result of the president ordering the release of 30 million barrels of oil from the nation’s Strategic Petroleum Reserve?

A trip to Disneyworld maybe? A new big screen TV? A new iPhone? A couple of Big Macs and fries?

Hardy har. One can only wonder at the thinking, or lack thereof, that went into that little exercise in political theater.

It has had, most analysts agree, no measurable impact on (1) gasoline prices, which were already declining in the wake of slackening demand following the Japanese tsunami and the tanking of the world economy, or (2) oil supply, which has remained relatively steady despite the loss of Libyan oil, supposedly the raison d’etre for the release.

Now that the nutso Libyan dictator Muammar Gaddafi has been given the heave-ho, it’s expected that country’s oil production will sooner or later begin flowing again and add some small measure of stability to world production.

The U.S. Strategic Petroleum Reserve was created in 1975 to stockpile oil (most of it in underground salt caverns along the Louisiana/Texas coast) as an emergency backup supply. Only twice before has SPR oil been released: during the Persian Gulf War and in the aftermath of Hurricane Katrina.

So, what was the emergency this time? Was the shortfall from Libya enough to justify tapping the SPR? Or was that simply the best “emergency” the administration could proffer to try and make the public think it was doing something about high gas prices?

“There is no emergency,” said the American Petroleum Institute following the president’s announcement of the release. World markets had already adjusted to the loss of Libyan oil, it said, and the 30 million barrels of oil amounted to a piddling 1.5 days of U.S. consumption.

Although there was a brief dip in oil prices following the president’s announcement, the market quickly absorbed the news and a month later oil was higher, as were prices at the gas pump. While pump prices have backed off somewhat in recent weeks, most industry analysts say market forces and sagging demand as a result of the lethargic world economy were the key influences — not the SPR releases. Even so, prices at the pump still are significantly higher than a year ago.

And given that the world seems to have adjusted to those higher prices, the likelihood of seeing sub-$3 gas again seems slim at best, despite presidential candidate Michelle Bachman’s pledge that, “Under President Bachman, you will see gasoline come down below $2 per gallon again — that will happen.”

Jon Huntsman, one of her rivals for the GOP nomination, summed up that pledge rather succinctly: “She isn’t rooted in the real world.”

Aside from ploys such as President Obama’s release of SPR oil, there is little any president, or the U.S. government as a whole, can do to substantially affect gasoline prices; rather, they’re the determined by the whims of OPEC, world demand, speculators, and other influences.

The former president of Shell Oil, John Hofmeister, in an interview with CNN’s John King (www.youtube.com/watch?v=BB8HVQPaB2U), characterized the SPR release thusly: “The equivalent of giving lollipops to angry children to calm them down.”

U.S. politicians, he said, don’t want to face voters “who are paying through the nose for gasoline at the pump” and tell them, “Look, it’s our fault, we’re the politicians who have refused … to drill American oil or to change our energy policy — we’ll open up the reserve for you and make you happy for a few days. It’s a nonsense situation.”

The U.S. is itself the No. 1 cause of high oil prices, Hofmeister said. “We use 20 million barrels a day; we produce 7 million. We could produce 10, 11, 12 million a day — but we don’t.”

Political theater by the president and political grandstanding by presidential wannabes aside, the crying need in this country is for leadership that will — finally, after four decades of shilly-shallying — develop a sound, comprehensive energy policy that will reduce this nation’s dependence on foreign oil.

How likely is that to happen in the acrid political atmosphere that exists today? Not very...

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