Really?! Well maybe. Consider the following. Early yesterday I posted on this site, "Hurricane Gustav and Our Strategic Petroleum Reserve," querying why the Department of Energy had not announced its willingness to release crude oil from the Strategic Petroleum Reserve in case Hurricane Gustav created a dislocation of oil supplies. The price of crude had been climbing by more than $5.00 a barrel over the past week with hurricane Gustav in our sights. After all, we have over 700 million barrels in storage bought and paid for by all of us. If not available to counter the impact of a Gustav, when and how and for what reason?
The post also signaled its contention that our oil cronied administration and its Department of Energy would not lift a finger to initiate any action that would constrain the price of oil from moving ever higher because of fears related to Gustav. That post was published at 8:50 yesterday morning. Of course, continuing its policies, the Department of Energy did nothing and would in all likelihood have continued to do nothing even had they read the post. While the Department of Energy continued to snooze its international counterpart, the International Energy Agency operating out of Paris and representing 27 countries from Europe to Australia, holding emergency stocks equivalent to 90 days imports of its member countries, took action. According to a Bloomberg report time dated yesterday at 12:34 PM Eastern Standard Time the IEA issued a statement that it would tap strategic stockpiles, if needed, because of Tropical Storm Gustav. Almost immediately the price of oil on the New York Mercantile Exchange dropped by $2.75 a barrel or 2.3 percent.
Later that afternoon, our Department of Energy was shamed into action. The IEA had shown that it was determined to use its resources to maintain some semblance of reasonable balance in oil markets. The Department of Energy and White House relented and finally issued a statement: "DOE is closely monitoring the situation and stands ready to use every available tool to ensure continuous and reliable supplies of energy in the event of a disruption." Why they could not have been first in line can only be subject to endless speculation.
So there we have it. Cause and effect? You decide. Consider the time frame. Gustav has been in the news for near a week. No word from either the Department of Energy nor the IEA on policy regarding disposition of petroleum reserves in the face of Gustav. My guess -- without the nudge from the Huffington Post, which may or may not have elicited the subsequent decisive action taken by the IEA, the Department of Energy would still be instructing us that Hurricane Gustav is no reason to make our oil from our Strategic Petroleum Reserve available to steady the turbulent distortions being caused in the market because of the advent of Gustav. That the administration needed to be shamed into action by the Paris based IEA speaks volumes, and sadly, it's all ugly.