While the price of oil continues to rise the most visible impact for most U. S. consumers is the price at the pump for gasoline. Locally the price can be found as high as $3.75 per gallon and everyday it seems to move higher. Combine that with the cost of home heating oil and many families are looking at a serious impact on their family budget.
White House Chief of Staff William Daley confirmed Sunday on “Meet the Press” that the President is considering using our strategic oil reserves as a tool to moderate the cost of oil. Mr. Daley said, “We are looking at the options. The issue of the reserves is one we are considering.”
Whoa, hold on here, that is precisely what we should not be doing, Mr. President! The current price increases in the futures market for oil are a result of unrest in the Middle East. While Libya has seen recent disruptions Saudi Arabia has announced they will increase output to make up for that relatively small shortfall. The speculation and increase in pricing is due to potential disruption that may occur and not a current shortage.
The oil traders and speculators are hedging their bets on future supplies. Smart money is moving to protect inventories in the event of a major disruption that would limit supplies from larger producers than Libya or perhaps shut down the Suez Canal. Those are valid concerns at this time but our President has more on his mind, like coming election.
The United States established the U.S. Strategic Petroleum Reserve to provide a reservoir that currently holds 727 million barrels of oil, or about 38 days of consumption. It is there to provide security to this nation in time of crisis. It is our vital resource if a supply disruption should occur. It was last used to provide a supply after the devastation and disruption caused by hurricane Katrina in 2005.
If the President releases oil from our reserve and draws down the reservoir and if the speculators are correct in their concern. A major disruption of oil from the Middle East could create a far greater crisis in the United States than $4.00 gas at the pump.
This is not the time to make a decision that would be popular (if it stems the tide of rising prices) only to risk a far greater crisis. A real disruption will create a worldwide crisis and leave the United States with fewer options. There is never a good time to risk American security for the sake of political votes in a coming election. Rolling the dice on our national security in the face of Middle East turmoil is outrageous. This is no time for political posturing to gain votes.
Could higher petroleum prices slow economic growth and recovery in our current economic environment? Certainly that may be true but it is not a valid reason to risk national security in the hopes that voters will not notice.
The International Energy Agency members South Korea and Japan are among the world’s top 5 crude oil importers. They have no immediate plans to tap into strategic reserves and an official with Japan’s Trade Ministry said, “There is no concern at all over supply shortages”.
America needs leadership not political posturing by a President with his finger in the air testing the winds of public opinion. The President should be more concerned with providing internal oil production for the short-term and energy independence in the long-term. Energy independence will not come quickly.
This administration has thus far provided lots of talk and little meaningful progress to solve our short-term and long-term energy problems. That last thing it should do now is risk our Strategic Reserves in exchange for votes in 2012.