Every time energy prices skyrocket, Democrats claim that expanding oil drilling will not affect the price of oil and generate price relief at the gas pump. They scoff at the ‘drill, baby, drill’ plan, denouncing it as insufficient in dealing with our “long-term” energy needs. Yet, there is one solution they support that increases the oil supply and is only “short-term;” the release of our Strategic Petroleum Reserves (SPR).
Last June, Obama took the unprecedented step of releasing 30 million barrels of oil from the SPR. Now Democrats are clamoring for another release. Any effort to release the SPR ahead of the election is both convoluted and cynical being that such a grave decision is typically triggered by an emergency like the Gulf War in 1991 and Hurricane Katrina in 2005. In fact, those were the only two occasions in which the SPR was previously tapped. Then again, maybe Obama was correct to presume that we are experiencing a severe disruption in oil production. There is a disruption in production; it is of his doing.
The other problem with such a release during tough, yet non-emergency, times is that the supply will not come from newly produced oil. As such, they need to be repurchased in order to refill the reserves. As the Heritage Foundation notes, the Energy Policy Act of 2005 requires that the reserves be refilled as expeditiously as possible.
Consequently, we will face the prospect of buying back the oil at a higher price, as demand increases without a commensurate, permanent increase in supply. Moreover, oil traders will be incentivized to buy up more supplies at the artificially low price, with the intent of holding it until they can sell it back at a higher price in a month from now. It will be entertaining to watch Eric Holder grandstand against the nefarious oil speculators once oil prices begin to rise again. This entire charade is a counterintuitive market distortion, devoid of any ability to change the long-term outlook of market prices for oil.
But aside for the fact that any SPR release is counterproductive, it also exposes Democrat hypocrisy about supply and demand. They always claim that an increase in supply is not enough to lower prices, yet they are admitting that the release of approximately 1 million new barrels per day from the SPR will lower gas prices. This begs a broader question: if the release of an additional million bpd has such a consequential effect on the global market, shouldn’t we drill in ANWR so we can produce an additional 1.5 million for 20 years? Let’s throw in the National Petroleum Reserve (NPR-A), the Arctic coast of Alaska (where Obama is blocking Shell Oil from drilling), the Outer Continental Shelf, shale fracking in every state, and deep water drilling in the Gulf? How about releasing the Keystone Pipeline project from the jaws of the EPA so we can import more oil from our ally, Canada? The development of these reserves would net billions of barrels of oil and trillions of cubic feet of natural gas. What happened to long-term solutions?
The unfortunate reality is that the only long-term solution to high energy prices is to repeal the man who desires ‘European-style gas prices’ from the White House. Until then, gas prices will fluctuate based upon that man’s approval ratings.
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