Countries within the International Energy Agency plan to release up to 60 million barrels from emergency oil stockpiles today in an effort to reduce oil costs. Wall Street Journal asks: What the heck?
Nymex crude oil is tumbling by about 5% today to less than $91 a barrel in frenzied trading as the market wonders what in the heck the International Energy Agency is doing with a mysterious, emergency press conference scheduled for right about now in Paris.
This morning’s awful economic data, atop the gloomy Fed outlook yesterday, isn’t helping either.
And, as usual, the United States will shoulder the majority of the burden, contributing 30 million of the total 60 million barrels from our emergency oil reserve.
There are a number of things wrong with this strategy. For one, where is the "emergency?" Yes, oil and gas prices are very high, however, high gas prices are a minor problem compared to a terrorist attack or natural disaster, when we may actually need that energy. It's called the emergency reserve for reason. The problem of high gas prices can be solved in other ways including through domestic drilling.
Emergency: a sudden, urgent, usually unexpected occurrence or occasion requiring immediate action, a state, especially of need for help or relief, created by some unexpected event
Second, considering the United States alone uses 18 million barrels of oil per day, the release of emergency stock will only temporarily lower prices. Not worth it down the road. Also, before the greenies get on me about the need to move away from oil, I'd like to point out the reason why the United States isn't energy independent is precisely because of overregulation and job killing policies coming out of the Environmental Protection Agency. There is plenty of oil in the United States, but we can't use it thanks to hysterical environmentalists and their partners in the White House.