Last Friday President Obama said that he is prepared to tap the nation’s strategic oil reserves to deal with any supply disruptions as part of his effort to keep gas prices under control.
He is referring, of course, to the political turmoil in North Africa and the Middle East which is the blame for the recent run-up in oil and gas prices combined with increased global demand. But is it really?
The Huffington Post reports that “sharp spikes in oil and gas prices in recent years were brought about more by speculators and price-gouging by energy companies, and less by problems of supply and demand.”
The main reason to doubt that unrest in the Middle East accounts for the price increases is the “fool me twice” principle. The manipulation by stock market gamblers and oil companies in recent years was blatant, antisocial, and very successful. Does anyone doubt that the same groups would try again?
Further, according to HuffPo, the citizen rebellions in the Middle East have been earth-shaking, but have had no discernible effect on the production and shipment of oil — which haven’t slowed down any.
The caretaker government in Egypt has quietly and efficiently kept the Suez Canal open for oil tankers and other traffic. Saudi Arabia has announced that OPEC is ready to make up for any gap in production in Libya and elsewhere if one occurs. Thus, the world may be changing radically but as far as oil and gas prices go, events in the Middle East have made for one big ho-hum.
Gas prices are again headed for the $4 mark. So when President Obama says “Should the situation demand it, we are prepared to tap the significant stockpile of oil that we have in the Strategic Petroleum Reserve,” is he simply preparing for the worst, given revolution in Egypt and civil war in Libya? Or is he speaking at the hands of mighty oil players?
According to CCN, Obama didn’t specify what price level would trigger a release from the strategic reserve, but did say that the U.S. and its allies will do what ever it takes “to make sure that oil supplies remain stable and that economic growth will continue” given the major burden for that gas prices have created for American households and businesses alike. Sounds all too familiar, doesn’t it?
He did acknowledge that gas price shocks are nothing new, underscoring the need to develop domestic oil sources and increase the use of alternative energy, “The hard truth is, is that as long as our economy depends on foreign oil, we’ll always be subject to price spikes,” he said. “So we’ve got to get moving on a comprehensive energy strategy that pursues both more energy production and more energy conservation.”
Alternative energy? Yes. Domestic drilling? No. However, it almost sounds like this is no longer a debate within the government. As we know, whenever the president gives speeches such as these, he is usually preparing the public for plan that have already been long underway.
What happened to those promises he made during the State of the Union speech?
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