June 27, 2011

The Oil Reserve Plunder Blunder

By Steve McCann
Until this past week, the International Energy Agency had released oil only twice from the emergency reserves of its member nations.  The first time was during the 1991 Gulf War in response to the loss of Iraqi and Kuwaiti oil production, and the other was in the aftermath of Hurricane Katrina, when the Gulf of Mexico fields and regional refineries were shut down.  The recent decision to release oil, ostensibly to offset the significantly smaller loss of supply caused by the civil war in Libya, was therefore a major policy shift.  This shift is not only misguided but fraught with potential problems for the future. The IEA was founded in the early seventies to offset the influence and potential threats of oil cutoffs emanating from OPEC.  Since then, the stockpiles have only been used in the most extreme of circumstances.  However, the ramification of last week's action is that the IEA and its member states may intervene more quickly, and for domestic political...(Read Full Article)