Oh...So That's What The 'Strategic Petroleum Reserve' Is For
Chris Rossini
Bloomberg reports:
America’s emergency stockpile of oil stands twice as large as the amount required by an international pact. George Soros has proposed selling some now to punish Russian President Vladimir Putin -- and U.S. lawmakers are starting to listen.
Oh, so that's the "emergency" that the stockpile is supposedly there for. Political punishments!
As the U.S. and its European allies seek to rebuke Russia for taking over the Crimea region of Ukraine, America could push down global oil prices by as much as $12 a barrel by selling 500,000 barrels a day from its strategic reserve, said Philip Verleger, a consultant who worked in the Ford and Carter administrations. The lower prices would cost Russia about $40 billion in lost income from oil and gas sales, equivalent to 2 percent of its economy, he said.
Lew Rockwell once provided a short backgrounder on this central planning monstrosity:
The nutty Strategic Petroleum Reserve had its origins at the height of New Deal fascism, 1944,when Secretary of the Interior Harold Ickes pushed the idea of stockpiling crude. Of course this was also a period when all food, clothing, raw materials, and nearly every other good was being rationed, all wages and prices were being set by the wartime czars, and young men were being drafted against their will and sent to their deaths in a foreign war. A little oil confiscation was hardly a big deal. But the call was renewed after the beginning of the Cold War, when Truman’s Minerals Policy Commission proposed a strategic oil supply in 1952. After the Suez crisis, Eisenhower joined the chorus. But it took Nixon and the oil crisis of 1974, a period of oil price control, to finally get the policy imposed. This is truly a bipartisan program: both parties with a hand in your gas tank.
And that's the real boil on the average American's back: We pay through the nose for gasoline because of the central planners. The Soviet-style oil reserve should be abolished. They should get rid of every single drop. And while they're at it, abolish the punishing gasoline taxes that we pay at the pump as well.
Instead of being used for the futile game of Empire, oil should be priced on the market without government rigging the supply and price as it sees fit.
Chris Rossini is on Twitter
http://www.economicpolicyjournal.com/2014/03/ohso-thats-what-strategic-petroleum.html