Monday, March 07, 2011

Strategic Pandering

"under my plan of a cap and trade system, electricity rates would necessarily skyrocket" Sen Obama, Jan. 2008

 "The Strategic Petroleum Reserve (SPR), filled to capacity at 727 million barrels, is the world's largest supply of emergency crude oil."   "In the event of an energy emergency, SPR oil would be distributed by competitive sale.  The SPR has been used under these circumstances only twice (during Operation Desert Storm in 1991 and after Hurricane Katrina in 2005)."  Department of Energy SPR website

Word today that President Obama is considering tapping the Strategic Oil Reserve makes absolutely no strategic sense.  Neither the situation we are currently in (civil war in Libya and unrest in the greater Middle East) nor President Obama's long term goals are well served by tapping the reserve and easing oil prices.
First, the Obama administration is categorically opposed to oil.  From his support for cap and trade, to his (illegal) prohibition on deep water drilling in the Gulf of Mexico, there is no one inside the administration that favors the status quo in US oil consumption, let alone expanded drilling domestically.  And that was before the Gulf oil spill last year.  After the spill, he made breaking the US dependence on oil a major priority.

Second, the spike in oil prices is blamed on the civil war unfolding in Libya, as well as the unrest all over the Mideast.  But while part of the spike may be blamed on market jitters, the cold reality is that only about 100,000 barrels of oil per day from Libya have been affected.  The rebels control large areas of oil production and pipelines to port, and it is in their best interest to keep the oil flowing and sell it as quickly as possible.  They need the cash to buy weapons and influence against Gaddafi.

Third, even if the entire production of Libya were shut down, it would account for 1.6 million barrels per day of output.  If the loss of 1.6 million barrels of oil to the worldwide market qualifies as an 'emergency' per the SPR directive, then why doesn't the potential production of 1 million barrels per day in ANWR qualify as an emergency?  The Obama administration could affect oil prices far easier than tapping the strategic reserve by simply announcing that it was dramatically easing restrictions to domestic drilling.  Remember, Saudi Arabia alone has slack capacity to increase production 1-2 million barrels per day, and they could do it almost overnight.  If the US announced its intention to drill in ANWR, the likely response from OPEC would be to increase output, thereby lowering prices and making oil production in ANWR and dozens of other areas less profitable.

So if tapping the SPR isn't in line with long term administration goals on oil dependence, and if the situation in Libya isn't really an emergency according to what the SPR exists to cover, then why would the Obama administration even consider floating a rumor about possibly thinking about tapping the SPR?  Pure politics.  As much as they will talk about reducing their carbon footprint, liberals and environmentalists don't like high gas prices anymore than the rest of us.  With his poll numbers still fading, it is no coincidence that Rasmussen has a bounce in presidential approval that neatly coincides with public rumors of tapping the SPR.

All of which means that conservatives should not be surprised to see President Obama tack to the middle, right or even back to the left to court whatever group he needs to get reelected. 

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