So, the Administration is going to release 30 million barrels of oil from the Strategic Petroleum Reserve, and the other International Energy Agency countries will release another 30 million barrels. This country uses up 30 million barrels of oil in around 36 hours, and that 60 million barrel figure?–the world consumes that in a single day. So, we’re making a dicey move here for no real gain.
“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” Energy Secretary Steven Chu said in a statement. “As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary.”
Unrest in Libya means about 1.5 million barrels of oil per day are not entering the market, and the administration is worried about meeting demand in July and August. Earlier this month, OPEC countries failed to reach an accord to raise oil production targets.
As of Wednesday, Americans paid an average of $3.61 for a gallon of regular gasoline, according to AAA, down from a high of nearly $4 in mid-May.
Oil prices fell in early trading Thursday morning. U.S. prices were down over $4 per barrel to $90.80.
The U.S. petroleum reserves were last tapped in 2005 to address supply issues following Hurricane Katrina.
Doc Hastings, the Chair of the House Natural Resources Committee, had this to say:
The Strategic Petroleum Reserve is intended for situations when there’s a dramatic supply shutdown, not to achieve short-term political gain. However, this is a clear admission from the Obama Administration that increasing domestic oil supplies will help lower costs.
Unfortunately, for the past two and a half years, the Obama Administration has consistently blocked efforts to expand American energy production and has actively placed moratoriums on domestic development. This release will only cover a fraction of the oil production lost from the Gulf of Mexico due to the Administration’s moratorium and permitting delays. The Administration’s anti-American energy policies have left the United States increasingly vulnerable to the whims of the world oil market and OPEC’s erratic decisions on oil supply.
Rather than tap the SPR, weakening our domestic security should a real supply disruption occur, we should look to develop our true oil reserves in the Gulf, Alaska, the Outer Continental Shelf and our public lands in order to create jobs, lower prices, reduce our dependence on unstable foreign energy, and strengthen our national security.”
And the American Petroleum Institute, reeling from the roadblocks that the Administration has put up over the past few years, expressed its own concerns, pointing out that:
. . . [t]he release makes little sense for American markets. Crude and gasoline inventories are above-average, and crude and gasoline prices have been trending down for weeks, despite the loss of Libyan oil, which markets have already adjusted to.
The SPR was intended to be used for supply emergencies. There is no supply emergency. We don’t know what impacts this might have on markets long term. But we could and should be taking steps that would increase our own production by 2 million barrels a day or more for decades, which is possible if the government would grant much greater access to America’s ample oil and natural gas reserves. This would do vastly more to help consumers, increase energy security, create jobs and deliver more revenue to our government. It’s action that would truly strengthen our energy future, not a temporary gesture that has no lasting benefits.
National Journal adds:
Republicans have repeatedly slammed President Obama over the unusually high prices, and Obama himself has noted his poll numbers appear to rise and fall with the price of gasoline. Many political strategists say that voter anger over near-record oil and gasoline prices could be a determining factor in the 2012 elections.
UPDATE: Jazz Shaw thinks this is cheery news indeed:
Well, that’s just fabulous, isn’t it? (By the way, is it too early for a martini?)
. . . [T]raditionally the release of SPR stores is done in times of emergency, usually when the flow of oil is abruptly and severely reduced. Typical examples have been when hurricanes mow through the off shore fields and shut down production for weeks or months. . . . We’re doing this in response to an emergency all right. The emergency is that the president’s poll numbers are tanking, and angry voters don’t want to continue to lay out 1/4 of their paychecks at the pumps.
But rather than actually do something to speed up domestic production and make us more energy independent, let’s just flush away some of the reserve we might really need if the you-know-what seriously hits the fan overseas in the next 12 months. Simply fabulous.
Bah. I’m off for that martini . . .
UPDATE 2: Da TechGuy has more, plus an EPA-related video.
UPDATE 3: Prof. Jacobson:
“Release Baby Release” is the new “Drill Baby Drill”
Yes, “drill baby drill” will not increase the supply of oil this month, but if we had been drilling baby drilling the past two and one-half years, instead of stifling production almost everywhere, we would not need to be releasing our strategic petroleum reserves.
Indeed; read the whole thing.