Saturday, June 25, 2011

Why Now? Why At All?

Silence on my blog yesterday as I have been pondering what the hell is up with releasing 60 million barrels of oil from strategic reserves, 30 million from U.S. reserves, at a time when prices are already declining. It was said to be caused by “current Middle East disruptions,” but how can that be when prices are dropping? The communiqué went on to mention Libya, but that conflict is almost three months old, Saudi Arabia promised to replace any losses from Libya, and in any case prices are dropping. “Current disruptions” cause prices to rise and prices were, at the risk of becoming really monotonous, dropping at the time the release was announced.

A guy on NPR said, “It’s an economic Hail Mary pass,” meaning, “The economy is in the tank, we have no idea what to do about it, so what the hell, let’s release some oil.” That sounds about right to me. It’s about the only thing that hasn’t been tried yet, so throw that against the same wall you’ve been throwing everything else at and see if it sticks any better than anything else has. Yeah, good luck.

It does reveal to bogus nature of the release; it is an effort to manipulate oil pricing, which is not the purpose of the reserve. The reserve is in place to serve as a buffer against real oil shortages, such as occurred during the embargo of the 1970’s, and it has been used only twice. The release during Gulf War I was certainly legitimate; the release after Katrina was, perhaps, stretching things a bit. This release is nonsensical in its reference to “current disruptions.”

And as an economic solution it is, at the very best, a short term solution to a long term problem. That understates it. It is a partial solution lasting a few days, for a solution which is systemic and which is not only destroying our economy, but which is taking our society and our planet down with it.

1 comment:

bartendercabbie said...

I agree that the "reserve" is to be used only in a true strategic emergency. Poor economy and the Libya "war" does not qualify.

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