Tapping the Strategic Petroleum Reserve
The Strategic Petroleum Reserve (SPR) was established as a safeguard against emergencies such as the cutoff of oil supplies from the Middle East. Even when prices have spiked, previous administrations have been loath to tap the SPR. President George H.W. Bush drew on the SPR during the first Gulf War, and George W. Bush tapped the reserves following Hurricane Katrina.
The only significant non-emergency drawdowns, in fact, have taken place during the Clinton and Obama administrations. Now Obama is reportedly considering drawing on the SPR an unprecedented second year in a row, but the only "emergency" in sight is the public's dissatisfaction with high gas prices -- and the fact that it's happening in an election year.
Drawing down the SPR in the absence of an emergency is bad policy. With only enough oil to fuel the country for 36 days, the SPR is barely enough to get us through a short-term cutoff in supplies. That's why, in his first year in office, President George W. Bush ordered the SPR to be filled to maximum capacity. Now Obama wants to drain it for no other reason than to improve his re-election chances.
Sapping the SPR at this time is especially dangerous because, while there is no emergency at present, there may be a very real emergency in the not-too-distant future. If Iran blocks the Strait of Hormuz following an Israeli attack, there might be good reason for drawing on reserves. But for Obama to argue that an emergency exists just because polling is running against him is absurd. Does this president actually believe that his re-election is more important than the fate of the nation in an actual energy crisis?
Well, yes, he does.
Admittedly, high gas prices do constitute a problem for the American people, but tapping the SPR is not the way to solve it. There is a solution, and Obama should have been pursuing it for three and a half years now. That solution is to do everything possible to spur more domestic production of oil and gas.
The proper response to higher gas prices is a crash program to expand domestic supplies. The president should immediately announce approval of offshore exploration on the East and West coasts, permit drilling in ANWR and elsewhere in Alaska, reverse his decision on the Keystone XL pipeline, and approve shale drilling on federal lands. The effect of this announcement would be instantaneous, not five or ten years down the road as Obama claims, because global futures markets would immediately factor in future supply increases. Lower gas prices would result.
Instead of actually lowering pump prices, Obama just wants to appear to be responding to prices. He knows well enough that drawing down the SPR, while it certainly would reduce our energy security, would do nothing to reduce global oil prices. Even something as dramatic as tapping 10% of the SPR (72 million barrels) would amount to less than a single day's global consumption (90 million barrels). Global prices would soon revert to prior levels -- the only consequence being that the U.S. would be more vulnerable to a supply disruption.
Like everything else he does, Obama's talk of addressing high gas prices is driven purely by political calculation. He wants to appear to be in charge, leading an international effort, including discussions with British Prime Minister Cameron, to bring down global energy prices. But everything he has done for nearly four years, and everything he proposes for his second term, has the effect of raising prices. It is astounding that this president, having declared his intention of raising prices, having done all he can to raise prices, and having seen prices rise accordingly, is now campaigning as the public's gas-price savior. It might be called duplicitous, but that would be way too kind.
The only way to bring down gas prices is to increase supplies or to reduce demand. But demand for oil is not going down anytime soon. According to ExxonMobil's "Outlook for 2012" report, oil will still be the world's most widely used fuel in 2040. Tens of millions of Chinese and Indians consumers are entering the middle class, and they are buying cars in unprecedented numbers. Vehicle sales jumped tenfold in China between 2000 and 2010, and there is no reason for them to slow in the future. And nearly all of those vehicles are fueled by petroleum. So we are left with two choices: increase production or pay higher prices.
Obama has stubbornly resisted increasing production his entire term in office. Even now, with the public outraged at high prices, he is demanding higher taxes on oil companies -- taxes that would be passed along in the form of higher gas prices. Despite all his talk about wanting to lower gas prices, Obama's policies are designed specifically to create higher prices.
Obama and his energy secretary, Steven Chu, have plotted for years to bring about $10-a-gallon gas. Now that they're halfway there, they must be pleased with themselves. The only problem is that the American people are not pleased, so Obama has to come forward and appear to be doing something to lower prices -- while simultaneously doing all he can to raise them. Thus, all the talk of tapping the SPR, but no action on drilling or pipelines.
It really is a lot like Aesop's fable of the ant and the grasshopper. Our grasshopper president has spent four years pretending he has an energy policy that will get us through the winter. That policy is based on subsidizing green energy at the expense of fossil fuels. Now that wind and solar are a bust and new oil exploration is nowhere near where it would have been without Obama's interference, we find ourselves with inadequate supplies just when we need them most.
In Aesop's fable, when the improvident grasshopper realized he didn't have enough supplies to get by, he went begging to the ants, who had industriously piled up supplies all summer. But he didn't get much sympathy from those wise and hardworking ants. Do you think America will get much sympathy from the leadership in Beijing?
Jeffrey Folks is the author of many books on American culture, including Heartland of the Imagination (2011).