President's Bush's Tuesday news conference addressing energy issues and the economy included his usual plea to allow more drilling for oil in U.S. "territories" and some routine bashing of Congress for supposedly blocking efforts to expand domestic refinery capacity. In War Room, Alex Koppelman handily disposes of the idea that drilling in ANWR will make any real difference in gas prices in the foreseeable future. But during one portion of the press conference How the World Works actually found itself nodding in agreement with the President -- an event so startling and rare as to be worthy of its own blog post.
One reporter asked whether, given record gas and oil prices, it was finally time to stop filling up the Strategic Petroleum Reserve.
In this case, I have analyzed the issue. And I don't think it would affect price, for this reason: We're buying, at the moment, about 67,000 to 68,000 barrels of oil per day for filling statutory obligations to fill up the SPR.
World demand is 85 million barrels a day. So the purchases for SPR account for 0.1 percent of global demand, and I don't think that's going to affect price when you affect 0.1 percent. And I do believe it is in our national interest to get the SPR filled, in case there is a major disruption of crude oil around the world.
Bush then ladled on some gratuitous al-Qaida bashing, but his main point is correct. Neither temporarily halting purchases of oil for the reserve or even releasing the entire contents of U.S. holding (which currently equals about 58 days' worth of U.S. consumption) would make a darn bit of difference in resisting the long-term trends that are pushing oil and gasoline prices higher. To attempt to thus manipulate the market would be just another bit of election-year quick fixing, like the gas tax holiday Sens. McCain and Clinton are both so hot for.
The purpose of the Strategic Petroleum Reserve is to maintain a source of supply in the case of a severe, emergency disruption to the flow of oil. How stupid would the U.S. government look if it opened up the SPR spigot now, in a vain attempt to reduce pain at the pump over the summer, and then had another monster hurricane hit the Gulf of Mexico in late August, hammering both offshore oil production and refinery operations?
One could possibly make a case for halting purchases for the SPR on the theory that the price of oil is too high, and it might be more economical for the U.S. government to hold fire and wait for a price dip. The U.S. Government Accountability Office recently released a report suggesting that the government switch to purchasing a set dollar-amount's worth of oil every day rather than a set volume, so as to maximize efficiency by dollar-cost averaging. Of course that assumes that the price of oil will slump again -- a not impossible scenario that might be good for the governmental accounting books, but probably bad for making any significant progress dealing with our long-term energy problems.