Since the beginning of the Obama presidency the price of oil has nearly tripled from slightly over $30 in February 2009 to over $90 on the New York Mercantile Exchange this day. To date the president has barely dealt with this malignancy threatening to destabilize the feeble economic recovery he has sponsored to date. Yet during the presidential campaign candidate Obama presented himself as resolute on the issue of oil prices and their impact on the nations' well being.
In August 2008 much to dismay of the oil companies and most especially the oil speculators, which included many of the major bank holding companies such as Morgan Stanley, JP Morgan Chase,Citigroup and Goldman Sachs, presidential candidate Obama proposed releasing 70 million barrels of oil from the Strategic Petroleum Reserve (STP).
Just the idea that there was someone on the political horizon willing to deal with the issue of oil prices with potential access to the White House had an immediate impact on the price of oil, especially after the shameful oil coddling policies of the Bush administration. On August 4, 2008 after Obama aired his proposal the price of oil fell by some $4 a barrel.
Immediately the talking heads went into action. No, it wasn't the candidate's suggestion that was cause for the price of oil to fall but rather the then gathering Hurricane Edouard's change in trajectory which was now meant to bypass the Gulf of Mexico production rigs. Anything to put the concept of using the STP to combat excessive oil prices back into the box. No mention what the specter of releasing millions of barrels oil would do to a market riven with speculation. And of course, what could a mere 70 million barrels accomplish. Hardly a mention that releasing one or two million barrels a day over a one or two month period would wreck havoc on oil trading futures and probably bring down the price of oil by $20/bbl or more by chasing scores of speculators out of the market. And probably more so now than ever before, given that commercial oil inventories are virtually at their all time highs and the SPR is bulging with some 750 million barrels in storage.
For those who take solace in high oil/gasoline prices because it reduces demand mitigating global warming please understand it is madness to reduce consumption by lining the pockets of oil producers both here and abroad through ever higher oil prices. It is long past due that our government take this issue in hand and acts forcefully to reduce oil consumption by fiat, not by transferring billions upon billions to the oiligopoly. We did it once before. It was called World War II.
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