Mr. President, Now That We Need It, Give Us Our Oil Back

Mr. President, Now That We Need It, Give Us Our Oil Back

This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.

  • Iran is cheering
  • Speculators are profiting
  • Oil producers celebrating
  • Our nascent economy tottering
  • Household budgets being ripped apart
  • Home owners in Maine freezing

You are sitting on some 700 million barrels of oil in our Strategic Petroleum Reserve (SPR) bought and paid by both the 99% and even the 1%.

Here we are living an economic and political emergency while the tool we have to deal with this issue remains untapped.

A reasonable release from the SPR would immediately drop the price of oil significantly and in turn keep gasoline prices from rising further in the months ahead and very possibly keep the economic recovery on track. In June 2011, when the Department of Energy announced it would be releasing 30 million barrels of oil, the price of oil dropped almost immediately by $4.00/barrel ("White House to release 30M barrels of oil" Politico 06.23.11) sending the speculators running for the hills.

Back then when the release was announced Speaker of the House John Boehner bridled:

Everyone wants to help the American people and lower prices at the pump -- especially now, in tough economic times. And it is good that the Obama Administration is conceding that increased supply will lower those costs. But by tapping the Strategic Petroleum Reserve, the President is using a national security instrument to address his domestic political problems. The SPR was created to mitigate sudden supply disruptions. This action threatens our ability to respond to a genuine national security crisis and means we must ultimately find the resources to replenish the reserve -- at significant cost to taxpayers.

This time around Mr. Boehner and everyone else should understand high, ever higher, oil prices are Iran's most effective weapon. It will help the mullahs realize the cash flow they need to maintain their authoritarian rule while playing nuclear roulette. Embargoing swaths of their oil exports will have little or no impact if their saber rattling, together with the help of the oil speculators, pushes oil prices to ever higher highs.

Mr. President, pull the plug on the SPR now, and let the oil flow.


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Someone  |  April 14, 2012
Reading the title of the article I thought it was going somewhere. But he only mentioned the problem one time. "Speculators are profiting" Why havent they looked more into the "futures manipulation" that is driving higher oil prices. until they stop it the oil prices will keep doing this there are a lot of rich people that are wanting these prices to keep going up. so they can make even more money.
alvin holtgrave  |  April 14, 2012
Please dont release oil. Need to save the oil for a real shortage develops , like when the war with Iran starts. The price of oil will reach 200 $ a barrel then and will have real shortages then.
jb  |  April 14, 2012
The more I ponder the thinking behind this article, the more frustrated I get! First, the headline intimates that we only now need oil? What have we been doing for the last 100 years, in terms of creating generations of ever-greater dependency on the miracle agent of convenience and commerce that is oil? Sheeesh. NOW? The implication is that the marketplace and the creative mathematicians behind the synthetic investment instruments are behind an artificially priced commodity. Not a whit of acknowlegement that global demands, global influence, are simply driving oil price. Using the reserves might relieve price for a moment, but the mechanisms that obscure and disallow true price discovery would not be remedied. If were serious, we eleminate all tax breaks and other direct and indirect subsidies for ALL energy sectors: nuke, coal, nat gas, oil, solar, wind, biomass, conservation. Let the dust settle. Id be willing to bet one of my few dusty dollars that oil price would NOT drop significantly. The markets are not completely opaque, and there is some honest baseline value in oil being reflected at todays price. North dakota oil is averaging in the 70 to 80 dollar range, as it is stranded, and cant compete with the more fungible oil port-side around the world. Paradoxically, when the pipleines and transportation of Williston Basin product come on line, NoDak oil price will RISE, as the higher dollar global demand will have a crack at buying it on a global basis. The implication in this article smacks of an entitlement mentality: we ought to have $2.50 gasoline at the pump. Those days are GONE. Are you a victim? Dont demand the reserves be released, demand that the government get out of the way of the market, by discontinuing its subsidies and tax breaks. Set back and let the energy dust up settle out. The speculators in the commodities markets may flee for a moment, but they will be back, like a magpie or coyote competing for a carcass with wolves and bears. The allure of a price-inelastic essential commodity like oil is irresistable. There is money to be made in all phases of it-- as long as you and I demand it. Pogo had it right... the enemy is US
JB  |  April 14, 2012
Lets assume that the figure of 19 million bbls per day is accurate as Americas demand. That 700 million bbl is 36 days of reserves at un-rationed demand. Our current military slurps a significant portion of the US gross demand. The Strategic reserves will barely keep the military going, much less the rest of critical strategic activity (think food production). Frankly, the sooner we get the stuff up and out, and burned up, the sooner we can move on to less of a culture of dependency. Less oil = more freedom.
Walker  |  April 13, 2012
I agree its time we drill for the USs oil and stop drilling in other countries just so they can sell it to the US. We Americans have taught all the other countries how to drill and produce there resorces and in turn we are buying it at a all time high. So yes its time to decrease the rate we are importing and start increasing the rate we drill and produce our natural resorces. I was raised to be self soficant in the greatest country in the world the United State of America were we once made our on things and now we import them.So we need to get back to the basics and start suppling our on demand.
Ernie Arrenegado  |  April 13, 2012
Under Bush an other presidents wanted oil to be independent from the Arabs. Now that they have more oil and gas they can use along comes the great Obama and more important the Democrats. I should say Hollywood oval office crowd no drilling,no work,no dirty oil form Canada and no nothing that makes the earth fill sick. As long as there bank book is full we all can just look in on Rodeo Dr. crowd.
Tomlinson  |  April 13, 2012
This is a dumb idea. The SPR is for emergencies.
george  |  April 13, 2012
The last time that SPR oil was released, oil prices did moderate after the announcement -- but had rebounded within the space of a week and by the time the oil made it onto the market oil prices were in fact higher than before the announcement. Moreover, the other countries that were supposed to release inventories as part of an international plan (as Obama had hailed it), never ended up moving inventories to market because of the limited impact they saw in the US portion of the failed experiment. As for "sending speculators running for the hills" -- I wonder if the author has considered that these same speculators were the ones who bought the SPR oil so that they could trade it elsewhere or store on foreign flagged tankers to sell it back later to the US at higher prices. The rest of the arguments the author makes here are also flawed. For instance, Iran is NOT benefiting from higher oil prices. Their economy has in fact ground to a halt as their currency has devalued strongly due to the inability for external banks to remit money to Iran limiting the countries foreign currency imports. Where Iran can find buyers it is through offers of significant discounts to market and includes free freight on Iranian vessels. The mullahs are not laughing, they are increasingly closer to losing grip on a country which not too long ago was facing widespread public unrest over flawed elections.
Ayaz  |  April 13, 2012
I agree with Sean that increased price has nothing to do with tapping more reserves, we still have enough oil available to meet the demand. Increased oil price is a monopoly of world oil producers and big corporates, they are addicted to making profits of multiple times of the cost and increase it each year regardless of impact on consumers. Drilling in environmentally sensitive areas should be given a thought without listening to business community. Oil Sand production is one of the worst examples. Everyone knows how much environment damaging it is but...who cares as long as we are making money. There are more serious issues with US economy than NOT drilling.
Alex S  |  April 13, 2012
If the author thinks this is an emergency worthy of tapping into the SPR he clearly has a short memory.
R P Robinson  |  April 13, 2012
I do not agree with reducing the strategic petroleum reserves. We are already far too dependent on foreign oil. The Government needs to loosen the unrealistic regulations it has created regarding exploration in the US. There are more than enough US reserves in the ground; the country needs them out of the ground and supplying this country. To draw down the SPR creates a dangerous situation should there be any outside aggression against this country and the import supply hindered. It is the same thing that has been happening with Social Security; rob Peter to lessen Pauls pain at the pump and let future generations struggle.
Robert Gaston  |  April 13, 2012
Mr. Learsey, The SPR is for emergency situations. Releasing oil from it would be wasteful and unproductive. It should only be used in the advent of a serious cut-off of oil supplies. The solution is to free American oil supplies from political maneuvering. Let us drill for our own oil. There is a huge supply of American oil, in the US, Canada, Brazil and Mexico. We have more oil on this side of the world than the Saudis and they know it. The US and Canada have an estimated 300 to 800 year supply of oil and gas.
thackney  |  April 13, 2012
Insanity. It makes as much sense as quit paying your insurance premium to pay your medical deductible. Does the author not understand the word Strategic?
Patrick  |  April 13, 2012
How about drilling more, too? Bad strategy to tap the reserves and hinder drilling, imo. Bringing in the 99 and the 1 - why not more jobs for everyone and less money overseas to the mullahs?
Sean O''''Boyle  |  April 13, 2012
Mr. Learsy has it a bit wrong. Supply of crude is not the central "problem" with higher than typical gasoline prices. In fact, the US is exporting gasoline at the highest level in decades. The net effect of lower natural gas prices (i.e. lower electricity prices for many) combined with elevated gasoline prices is a virtual wash. Simple political grandstanding by those flaunting dubious credentials. The SPR was designed for emergency uses...the current price at the pump does not constitute an emergency. As that crude must be replaced (at currently high wellhead prices) I don't follow Mr. Learsys logic as the taxpayer foots this bill. High prices are a long run issue. This matter needs to be met with efficiency gains, usage adjustments and alternative forms of transportation fuel. Pumping more crude is just not the answer.