Yesterday's announcement that the U.S. would contribute 30 million barrels from its Strategic Oil Reserve to match the release by the International Energy Agency was a shocker indeed. It made no sense from an energy standpoint. Originally established in response to the Arab oil embargo of 1973-4, there was no threat to our energy independence. It was lamely argued that this release, less than two days of actual usage, would replace the loss of oil exports from Libya and would punish OPEC for their refusal last month to replace Libya's oil exports by increasing their production. Maybe . . .
Partisans lamely argued that this release was motivated by political posturing of the Obama Administration to earn "brownie points" with voters for temporarily lowering the price of gas at the pump. Maybe . . .
I suspect it may be more an act of economic desperation than political posturing. Without pumping up the economy, it is highly unlikely that Obama can be re-elected. The Fed is ending QE2 this month and offers no new monetary tools to pump up the economy. Congress is completely impotent and can offer no new fiscal tools to pump up the economy. So, what other tools are available?
When we have to use energy policy as the primary tool in economic policy, we are indeed desperate. It is like sending a kickboxer to a gunfight. Since our energy policy over the last forty years has not found any way to make us energy-independent, this may be its only use.
Those who advocate a pure laissez-faire government apparently now have it.
