Political Strategery

The Obama Administration announced that it is releasing 30 million gallons of oil from the Strategic Petroleum Reserve. ” Experts” are calling this  an excellent change in policy that will certainly help to calm the volatile oil markets. But, other experts are saying why now? So, who can we believe? I am taking my cue from Treasury Secretary Geithner who when speaking at a Dartmouth College panel discussion said the release was not political. It was using the reserve for that which it was  designed, to mitigate disruptions such as those brought about by the conflict in Libya. So, naturally if Mr Geithner says it is not political I must feel otherwise. Why might one feel that way? Let us see. For starters the reserve has 727 million barrels of oil and the President’s instructions released around 4% of that total. Next, Libya typically exports about 1.5 million barrels per day, a figure which is down to about  1/3 of that total. So, the amount of oil released was really not designed to  replace lost production, etc but rather to what? Perhaps it was designed  to occur in the midst of the ongoing decline in oil prices ( which leads to lower gasoline prices) thus causing a bit of an acceleration the decline. Then we have an end result of the Obama Administration claiming credit for the price of gasoline declining. A bit convoluted, perhaps, but just wait and see. But we must not drill for any additional oil, just pay Brazil to do so.

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