President Obama floated a trial balloon on June 9, suggesting he might release the U.S. strategic petroleum reserve to help ease rising domestic fuel prices caused by the loss of Libyan oil exports.
The loss was caused by Obama’s arguably unconstitutional and certainly unprovoked attack on Libya. But that’s a story for another day.
Does Obama believe that consuming the strategic reserve will ease rising fuel costs at home? Or does he have an ulterior motive in making the suggestion?
Using the strategic petroleum reserve would amount to putting a Band-Aid on a bullet wound. According to the Department of Energy, the reserve has only a 75-day supply. It was filled at an average cost of $29.76 per barrel. It would follow that the reserve would eventually have to be refilled at the current rate, more than $100 per barrel.
Can we trust those figures?
United Press International announced on June 9 that it had recently conducted an independent analysis of the reserve and concluded it would only last 34 days, based upon a national consumption rate of 21 million barrels per day.
If we deplete the reserve, where is the money to replenish it going to come from?
More importantly, what would the country do if we deplete the reserve and then have a real emergency with a significant disruption of oil imports?
Domestic oil prices are driven by global demand. With rising economies, such as China’s and India’s, hungry for oil, the law of supply and demand pushes prices upward. Throw in a weak U.S. dollar and the possibility of lowering fuel prices without significantly increasing domestic oil production is rather slim.
According to the energy department’s website, the reserve “provides the president with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy.”
Is it the loss of Libyan oil exports that is threatening the U.S. economy? Or is it the combination of uncontrolled government spending, a weakening dollar, a massive trade deficit and a domestic energy policy that has been ineffective since the Carter administration, if not longer?
Obama’s maneuver has all the characteristics of an attempt to draw attention away from his failed energy policy, which focuses on mid- to far-term needs while offering pitifully few solutions for today’s problems.
Obama’s energy policy has focused on renewable energy sources, such as wind and solar, while neglecting and sometimes even denouncing fossil fuels. The United States has abundant, untapped fossil fuel resources, enough to last for decades.
Wind energy is not viable in many areas of the country and the technology is years away from being able to make a significant dent in fulfilling America’s energy needs.
Solar energy is generally more efficient than wind, but it’s expensive to produce and requires rare earth elements such as indium, gallium and lithium.
A number of current events must surely have Obama worried about how energy prices will affect his re-electability.
Exxon Mobil recently announced one of the largest oil discoveries in the Gulf of Mexico in decades. Yet oil production in the Gulf has been hog-tied by the Environmental Protection Agency since last year’s BP oil spill.
Pressure on the Obama administration to ease restrictions will surely grow in the wake of the discovery.
Sarah Palin’s likely run for president must also give Obama cause for concern.
Palin’s domestic energy policy – “drill baby drill” – came under severe criticism from environmentalists after last year’s oil spill. But she has argued quite convincingly that pressure from environmentalists forced oil companies into deep water drilling, which is riskier than drilling in shallower waters. Palin’s energy policy will resonate with many voters.
To add to Obama’s energy woes, it appears that the strong-willed, Republican governor of Texas, Rick Perry, may soon announce his presidential bid. Perry is a strong advocate of increasing domestic oil and gas drilling.
An obviously frustrated Obama has asserted there is little he can do to lower near-term fuel prices. Enter the strategic petroleum reserve sleight of hand.
Obama’s assertion is incorrect. All that is needed to start bringing down domestic fuel prices is for the president to commit to a realistic, comprehensive national energy policy. The policy must include increasing domestic exploration for fossil fuels to help satisfy the country’s pressing energy requirements, building new oil refineries and continuing to focus on energy research and renewable, clean energy technologies.
The results would be fourfold.
* It would have a positive impact on gloomy American consumer confidence, which might boost Obama’s popularity with potential voters.
* It would likely bring down oil futures prices, which are driven by speculation.
* A greater reliance on domestic energy resources would help shore up global confidence in America’s ability to solve its internal problems without meddling in the affairs of foreign oil producers such as Libya and Yemen.
* An effective domestic energy policy would help the United States break its debilitating dependency on Middle East oil. This would surely please Americans of every political persuasion, especially those serving in the armed forces.
Zachary Hubbard is a freelance writer residing in Upper Yoder Township. He is a member of The Tribune-Democrat Reader Advisory Committee.
Click here to subscribe to The Tribune-Democrat print edition.
Click here to subscribe to The Tribune-Democrat e-edition.