Decision to tap oil reserves could backfire on Obama
The decision to tap the strategic petroleum reserve looks based much more on politics than economics. Obama needs to do "something" about the economy to look like he's doing his job. Yesterday the Federal Reserve said it was halting the escalation of monetary stimulus. There is no chance of further fiscal stimulus, and Republicans in Congress are talking about cutting back. So this is Obama's largely symbolic response. Thirty million
gallons, barrels, the amount of U.S. reserves to be released, is a teeny portion of the reserve. It's also less than two days' average consumption in the United States. (Heh. 30m gallons REALLy would be teeny.)
Texas crude is down about $4 this morning, perhaps responding more to the symbolism of the administration intervening in the markets than in the substance of a little bit of extra oil for sale. Oil prices were already declining. This isn't what many people believe the petroleum reserve is for. It's widely thought of as being there for true emergencies such as war and severe supply shocks. This isn't as nakedly political as if reserves had bene tapped in summer 2012. Nevertheless, the political overtones could hurt Obama.