Releasing the SPR wont create more gasoline.
No.. but it would deflate the oil "bubble" that is forming due to sheer speculation, and signal to the market that Bush was willing to stabilize oil supplies, if necessary. That, in turn, would reduce the price to refiners for producing gasoline, which would reduce the price of gasoline, although not totally meet all the demand for gasoline.
Oil prices today are affected by security of supply.
Just sending the signal that the US was going to stop filling the SPR, or even think about releasing some of it until tensions died down in the Mid-East, would be powerful medicine against the speculators, just as Saudi Arabia's signal that they are going to increase production has the same effect.
With 600 million barrels in storage the US has 79 days worth of oil available to substitute for a TOTAL STOPPAGE of imported oil (from all sources).
Considering such a scenario to be highly unlikely, even adding (or threatening to add) 1 million barrels to the global supply would pierce the oil speculative bubble just as quickly as the Fed pierced the equity bubble through higher interest rates back in 2000.
It all depends on whether current oil prices threaten to destabilize the US, and global, economy.
But at the very least, it's ludicrous to fill the SPR right during the height of the summer driving season. Why not time those purchases for the cyclical ebbs and flows that occur in Spring and Fall, before summer driving, or winter heating oil, demands create extra demand.
Hawk |
