Posted by
m0t0r1zed on Sunday, June 08, 2008 10:59:25 PM
Question: why should we idly watch as the speculators play a game of economic chicken with each other and try to jump out at the last minute? Seriously, isn't it in the best interest of the nation to curtail their little joyride?
When Bush took office, the SPR was at around 545 million barrels of oil. Now it is at 700 million barrels. Set aside 500 million barrels as the strategic reserve to be used only during times of national emergency. Allocate around 200 million as a permanent, non-strategic petroleum reserve (NSPR) to be used to fight inflation and price spikes and to adjust for short-term shortages due to natural disasters.
The Fed controls interest rates to manage the economy and fight inflation. Why shouldn't the NSPR be used to alleviate the current economic crisis created by inflated oil prices? It would be prudent to pop this oil bubble before it gets any worse. We just went through the credit and housing fiascos, so there is no point in going through another mess - especially one that is dragging down the world economy, transportation, and petrochemical-based manufacturing.
Bush should announce that we are effectively putting 200 million barrels of oil on the market and will begin releasing 1 million barrels a day (or something to that effect). Hopefully, just the shock of the announcement will do the job and not much will actually have to be released. Also, in the future, the reserves should be expanded to 1 billion barrels, and 750 million set aside as SPR and 250 million as NSPR. Refilling should resume when the prices are at lower levels.
The counterargument to this idea, that this is the strategic reserve and should only be used in a national emergency, is a bit arbitrary. Exactly how much oil is necessary for the strategic reserve? 750 million barrels? 1 billion? 10 billion? All of the oil in the world? During a serious emergency, there would be severe restrictions on usage and rationing implemented, so current consumption levels would not be likely. It is also wise to create two distinct reserves due to the uncertainties of future political happenstance.
The only valid reason I see for not tapping into the reserves right now would be a military operation against Iran in the near term. Although I still think you could open the reserves ... unless you are planning for a full-scale invasion or are expecting severe Iranian counterattacks against oil and shipping.
Naturally, this is only a short-term solution. It would be wise to also have long-term solutions implemented as well. Haha ... yeah, right.