The move to release 30 million barrels from our Strategic Petroleum Reserve yesterday came as a shock. It seemed overwhelmingly stupid and a move made out of panic.
First, that amount is what the world uses every 16 hours. It can hardly make a dent in our needs.
Then, it was confusing since the price of oil had been declining from a high of $114 a barrel to around $92. Gas prices had been falling 20 days in a row ahead of yesterday. There was no huge uptick taking place.
The Saudis had assured the world that they would increase oil production to meet any lost by the Libyan conflict. In fact, releasing the reserves was like kicking sand in their face. Why should they buck OPEC to help us when we would undermine them in this way?
The oil reserves are what they say – put their strategic reasons. The U.S. had only released them when Iraq invaded Kuwait in ’90-’91 and after Hurricane Katrina. What event precipitated it this time? What if we have a sudden disaster?
Replacing the oil will probably cost the taxpayer, too. It was put in at $90 a barrel and probably will be replaced at $100 a barrel plus.
Then it has a negative psychological effect on business. The move telegraphed the administration’s fear about the economy. Who wants to hire in that kind of environment?
Should the government be interfering in the free market anyhow?
If you were the enemy, wouldn’t you now wait until this is used up and we are down in supply to up the price substantially?
All on counts, it doesn’t make sense.