Green Room

Hey, Let’s Tap Into the Strategic Petroleum Reserve!

posted at 2:45 pm on March 6, 2011 by

Another session of Sunday morning shows came around and I found myself watching Meet the Press. (Something which happens more and more since ABC made the disastrous decision to drop the indispensable Jake Tapper as host of This Week in favor of Christiane Amanpour.) One of the guests was President Obama’s Chief of Staff Bill Daley, and the subject of the discussion turned to the rising prices of both gasoline and barrels of oil.

Aha!” I thought. “Now we’re getting down to something important. The administration has been choking off domestic oil production and the unrest on the Arab street is bringing things to a boil. This is a great chance for somebody to step up with a concrete plan.”

Well, it turns out that the White House certainly is considering a plan, but not one that anyone outside of a rubber room could have predicted.

White House Chief of Staff Bill Daley said on Sunday the Obama administration is considering tapping into the U.S. strategic oil reserve as one way to help ease soaring oil prices.

Speaking on NBC television’s “Meet the Press,” Daley said: “We are looking at the options. The issue of the reserves is one we are considering. … All matters have to be on the table.”

There has been support among Senate Democrats for tapping the reserves. Senator Jay Rockefeller on Thursday became the third Democrat to ask President Barack Obama to tap America’s emergency oil supply to cool prices that have risen past $100 a barrel on the strife in Libya.

I’d like to tell you what was said during the rest of the interview, but I threw a brick through my television screen at that point.

So let me see if I’ve got this straight:

  • Oil and gas prices are rising in response to well established laws of supply and demand. Since we’re not going to magically produce all the energy we need for the next few years through “green initiatives” a good portion of this will have to come from fossil fuels for the foreseeable future.

  • We’re not producing enough oil domestically because the federal government is sitting on drilling permits like they’re holding hostages.
  • The foreign sources of oil from many of our overseas suppliers (who we’re supposed to be reducing our dependency upon because most of them don’t like us very much to start with) are now endangered as several of these countries totter on the brink of collapse.

And your solution to the problem may be to start draining our strategic reserves?

Before checking myself into a home for the terminally confused, I dropped a note to Jane Van Ryan of the American Petroleum Institute to see what they thought of such a plan. She writes:

API traditionally has opposed using oil from SPR to address price issues. The reserve was established to protect the United States against an interruption of petroleum supplies, such as occurred after the hurricanes Katrina and Rita. At that time, a few of the oil companies purchased oil from the SPR to maintain the flow of oil products to U.S. consumers.

At this time, there is a significant amount of oil available in the United States, and Saudi Arabia has said it has enough spare production capacity to make up for any shortfalls that might result from the Libyan conflict.

Those reserves are there to protect us, as Jane points out, in the event of a massive disruption in the flow of oil supplies. And for the moment, let’s put aside the commonly held opinion that the Obama administration is currently acting as the biggest disruption of domestic oil supplies. With Libya and other nations in the region experiencing unrest – or the threat of it – I would think that this is precisely the time when the United States would be seeking to top off those reserves, if not expand their total storage capacity. Draining them even before foreign supplies are cut off is nothing short of the height of folly.

And all the while, domestic producers are standing around by the Gulf of Mexico – as our British friends might say – with their tallywhackers in their hands, ready and willing to produce the oil we need, but waiting on Washington approval.

The inmates are running the asylum. I’ve lost most of my capacity to remain civil and balanced on this question. This is a matter of not only energy independence, jobs and fiscal recovery, but of national security. And these sorts of answers rob the Obama administration of any and all credibility when it comes to possessing a sane energy policy.

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But don’t you know, they would say, that it will take a few years before we start seeing the oil from any new permits we issue.

(Nevermind that they gave the same justification for their lethargy a few years ago, and a few years before that.)

Long term thinking is so terribly absent from our federal government. On issue after issue after issue.

David Shane on March 6, 2011 at 2:54 PM

Draining the strategic reserve is like confiscating all of the wealth of ‘rich people’ to balance the annual budget; you only get to do it once.

Skandia Recluse on March 6, 2011 at 2:56 PM

If your only knowledge of the world came from the liberal media, this “strategy” would make perfect sense.

After all, the entire Middle East is currently undergoing a peaceful transformation into stable and productive democracy, right? By this time next month, oil should be down to $15.00 a barrel.

logis on March 6, 2011 at 3:29 PM

Just in case the econuts are wrong about agw we better save that oil for next winter, unless O plans on taking the oil away from Iraq in the meantime. Where are all the adults to do some just in case planning? This current crew only wants to make our dear leader look good in the short term.

Kissmygrits on March 6, 2011 at 3:32 PM

Well, he’s only got 22 more months to ensure that the US never again can threaten world harmony, so it’s time for an increase in speed.

Expect the anti-American schemes to be more and more outlandish as this administration gets closer and closer to its end.

cthulhu on March 6, 2011 at 4:03 PM

They drain the reserves, then we attacked and need them. It’s all part of their plan to kill America.

SouthernGent on March 6, 2011 at 4:41 PM

D’oh!

cmsinaz on March 6, 2011 at 4:45 PM

For the edification of my fellow commenters here, it is worth noting that the known and usable reserves of oil in United States territory alone would be enough to make us completely energy independent for at least the next 20 years, if not longer. That’s as in no foreign oil at all.

That’s also assuming that all restrictions on drilling are completely and summarily lifted. Oh well…it’s not the only good idea I’ve had that will never be implemented.

gryphon202 on March 6, 2011 at 4:47 PM

Boy, do we need a President Palin!!! Now!

shmendrick on March 6, 2011 at 6:12 PM

The last thing we need is to tap the reserve – I know we have in the past – but – was it different that time ??? one way or another – we will drill sooner or later — and the heck with the econuts ….

wheels on March 6, 2011 at 6:35 PM

Why not drill president dumbass? Now why would anybody call the president a dumbass?

Did you know you can convert coal to diesel fuel and gasoline? Yep invented in the 1920s, Fisher-Tropsch is it’s name … just google it.

tarpon on March 6, 2011 at 6:46 PM

Let me add this — at poker these guy lose big time — they have nothing – other than the hand they are holding – and if that doesn’t win –they throw a wrench in the machine — that’s all they have one … F-up after another … Guns a Walkin. to Mex ..to name the latest one ..

wheels on March 6, 2011 at 6:49 PM

Oil and gas prices are rising in response to well established laws of supply and demand.

I enjoy reading your posts on the energy industry but this is nonsense. Oil markets are not free and are not rational. If rational supply/demand forces were at work the price would have gone up a fraction rather than as much as we have seen.

lexhamfox on March 6, 2011 at 7:06 PM

Oil markets are not free and are not rational. If rational supply/demand forces were at work the price would have gone up a fraction rather than as much as we have seen.
lexhamfox on March 6, 2011 at 7:06 PM

Technically, it’s not just “supply and demand.” There is another concept called “risk.” That’s what’s driving up oil futures right now, and it is 100% rational.

logis on March 6, 2011 at 7:12 PM

This approach to “solving” the oil crisis is certainly of a piece with the administration’s approach to other problems. Consider their solution to the looming debt crisis: borrow more. As Obama himself is fond of saying, “The Republicans drove us into a ditch. Now let’s all grab a shovel and dig.”

Howard Portnoy on March 6, 2011 at 7:59 PM

Technically, it’s not just “supply and demand.” There is another concept called “risk.” That’s what’s driving up oil futures right now, and it is 100% rational.

logis on March 6, 2011 at 7:12 PM

No. Risk is calculable and the current price increase is out of proportion to the measurable risk. Take the entire Libyan and Algerian production out of the equation and it does not measure up to the increase. The Saudis could turn a tap and make up the difference on crude with ease. Normally futures are structured around risk management but these contracts don’t seem to be. It’s just speculative.

lexhamfox on March 6, 2011 at 9:17 PM

No. Risk is calculable and the current price increase is out of proportion to the measurable risk. Take the entire Libyan and Algerian production out of the equation and it does not measure up to the increase. The Saudis could turn a tap and make up the difference on crude with ease. Normally futures are structured around risk management but these contracts don’t seem to be. It’s just speculative.

lexhamfox on March 6, 2011 at 9:17 PM

You got the handy dandy risk/supply/demand calculator handy?

astonerii on March 6, 2011 at 9:24 PM

Now would be a very good time for someone to ‘lose’ a good portion of the SPR…so that when the inevitable disaster came the military actually had a reserve to go to.

Just sayin’.

Dark-Star on March 6, 2011 at 9:43 PM

Draining the strategic reserve is like confiscating all of the wealth of ‘rich people’ to balance the annual budget; you only get to do it once.

These aholes are chomping at the bit to do exactly that.

single stack on March 6, 2011 at 10:06 PM

lexhamfox on March 6, 2011 at 9:17 PM

You got the handy dandy risk/supply/demand calculator handy?

astonerii on March 6, 2011 at 9:24 PM

When you have a trillion dollars, those things are pretty easy to come by — and vice versa.

logis on March 6, 2011 at 11:36 PM

Lower gas prices by tapping SPR, win election, empty SPR, continue to destroy America. Yep, it’s a great plan all right!

gordo on March 7, 2011 at 8:14 AM

This post has been promoted to HotAir.com.

Comments have been closed on this post but the discussion continues here.

Ed Morrissey on March 7, 2011 at 1:25 PM

This is all meant to scary the speculators in the oil market

J_Crater on March 7, 2011 at 9:35 AM