Obama thinking of tapping the Strategic Petroleum Reserve

Because nothing is worse in an election season than rising gas prices.

Reuters:

The White House is "dusting off old plans" for a potential release of oil reserves to dampen prices and prevent high energy costs from undermining sanctions against Iran, a source with knowledge of the situation said on Thursday.

U.S. officials will monitor market conditions over the next few weeks, watching whether gasoline prices fall after the September 3 Labor Day holiday, as they historically do, the source said.

It was too early to detail the size of any release from the U.S. Strategic Petroleum Reserve and other international stockpiles if a decision to proceed was taken, the source said.

Oil prices have surged in recent weeks, with Brent crude prices closing in on $120 a barrel, up sharply from below $90 a barrel in June. The United States and other Group of Eight countries studied a potential oil release in the spring but shelved the plans when prices dropped.

As prices rise again, U.S. officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports.

"The driving force in this is both impact on the economy and impact on the Iran sanctions policy," the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while international sanctions were having an effective impact on its crude exports and revenues.

The United States has not yet held talks with international partners about a coordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency (IEA) were receptive to a potential release a few months ago when conditions were similar.

Those countries were concerned about the impact of high oil prices on the global economy and Iran then, and those concerns remain equally relevant now.

"The logic behind a potential release in the spring is at least if not ... more true today," the source said.

It's not the sanctions on the oil industry that are biting, but rather financial sanctions that have limited Iran's ability to conduct business with any of their trading partners. Credit markets are virtually closed off to them and trying to run a country from hand to mouth is nearly impossible. This has led to shortages and inflation which has made the Iranian people angry at their government.

Of bigger concern is the impact of increased oil prices on our fragile economy. But really, this move would be taken largely to keep the lid on gas prices until after the election. And if Iran and Israel go to war and we've diminished the SPR? Well, that's not as bad as Obama losing an election apparently.



Because nothing is worse in an election season than rising gas prices.

Reuters:

The White House is "dusting off old plans" for a potential release of oil reserves to dampen prices and prevent high energy costs from undermining sanctions against Iran, a source with knowledge of the situation said on Thursday.

U.S. officials will monitor market conditions over the next few weeks, watching whether gasoline prices fall after the September 3 Labor Day holiday, as they historically do, the source said.

It was too early to detail the size of any release from the U.S. Strategic Petroleum Reserve and other international stockpiles if a decision to proceed was taken, the source said.

Oil prices have surged in recent weeks, with Brent crude prices closing in on $120 a barrel, up sharply from below $90 a barrel in June. The United States and other Group of Eight countries studied a potential oil release in the spring but shelved the plans when prices dropped.

As prices rise again, U.S. officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports.

"The driving force in this is both impact on the economy and impact on the Iran sanctions policy," the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while international sanctions were having an effective impact on its crude exports and revenues.

The United States has not yet held talks with international partners about a coordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency (IEA) were receptive to a potential release a few months ago when conditions were similar.

Those countries were concerned about the impact of high oil prices on the global economy and Iran then, and those concerns remain equally relevant now.

"The logic behind a potential release in the spring is at least if not ... more true today," the source said.

It's not the sanctions on the oil industry that are biting, but rather financial sanctions that have limited Iran's ability to conduct business with any of their trading partners. Credit markets are virtually closed off to them and trying to run a country from hand to mouth is nearly impossible. This has led to shortages and inflation which has made the Iranian people angry at their government.

Of bigger concern is the impact of increased oil prices on our fragile economy. But really, this move would be taken largely to keep the lid on gas prices until after the election. And if Iran and Israel go to war and we've diminished the SPR? Well, that's not as bad as Obama losing an election apparently.



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