Free Markets, Free People
There’s a difference between a political use of the SPR and an emergency use of the SPR. It is for the latter the SPR exits. However the Obama administration has decided to use it for political reasons.
Why do I say that? Well, 30 million barrels of oil is about a day and a half use in the US. Or said another way, this is nothing more than political busy work in an attempt to pretend like the administration is a) concerned about the price of gasoline and b) doing something about it.
But a short walk back through their history with the oil and gas industry makes the case that they’ve essentially been opposed to gas and oil exploration and have used every excuse and bureaucratic means to slow or stop it in the two plus years they’ve been calling the shots.
American Petroleum Institute president Jack Gerard sums it up nicely:
"It’s confusing as to why we would wait to this point to release part of the (SPR), but we’ve still failed to step forward and say let’s bring long-term supply to the marketplace, create American jobs at a time when we have 9.1 percent unemployment and produce millions of dollars of federal revenue at time when we’re struggling with a debt and deficit crisis. … Just yesterday the administration sent a letter to Capitol Hill opposing a permitting bill that was designed to expedite permits in Alaska to produce oil and natural gas. We are getting a confused message."
API’s Mark Green make the most important point in a succinct three sentences:
The United States could and should be taking steps to increase its 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.
In the long run this would do more for consumers, increase energy security, create jobs and help solve the debt and deficit crisis, to which Gerard referred, by delivering more revenue to government.
Instead of a long-term energy strategy that would help keep the strategic reserve in reserve, the administration seems to be taking action for the sake of taking action trying to cover itself while the economy keeps struggling.
Karen Harbert, president and CEO of the Chamber of Commerce’s Energy Institute adds:
The Obama Administration’s decision to release oil from the Strategic Petroleum Reserve is ill-advised and not the signal the markets need. Unrest in the Middle East is likely to continue for quite some time, so a temporary increase in supply is not a substitute for a long term fix. Our reserve is intended to address true emergencies, not politically inconvenient high prices. Rather than dabbling around the edges, the Administration should take steps to increase domestic production of oil—on and offshore, like the bill the House passed last night. With U.S. crude oil production expected to decrease by 90 million barrels in the next year, the Administration should instead focus on increasing domestic production will improve our energy security, reduce our dependence on foreign oil, and create thousands of jobs.
Note the numbers she cites. The administration is releasing 30 million barrels over the next 30 days while presiding over a total drop in production of 90 million barrels annually due to their opposition to increased domestic production.
What is being done with the SPR release is simply more smoke and mirrors from the smoke and mirrors administration. It does nothing to address the long-term need for increased domestic production, it will do nothing to address the price of gasoline (there is no supply problem at the moment) and it is a misuse of an asset that is to be used for real and dire emergencies.
But then we’ve come to expect nonsense like this from the Obama administration. Symbolism over substance. Pretending to be both concerned about consumers and engaged in helping them when in fact their real policy is to opposed the real solution – increased domestic drilling.