The announcment from the Obama camp yesterday that the United States would contribute 30 million barrels of oil to a global economic relief effort was kind of a non sequitur, seeing as how such an injection would hardly cause a blip on gas prices, and looked like a pretty lame attempt for Obama to save some face. From Reuters:
U.S. Treasury Secretary Timothy Geithner defended the decision by industrialized nations to release emergency oil reserves into global energy markets, saying on Friday that it was not a political move.
"It's really as simple as this: there's a war in Libya, costs between one and two million barrels a day in lost output, I think 140 million barrels off the market so far," he said in response to a question at Dartmouth College, where he spoke on a panel.
"Reserves exist to help mitigate those kinds of disruptions and we helped to organize a coordinated global international response to help ease some of that pressure," he added.
The Paris-based International Energy Agency announced on Thursday that it was tapping member countries' emergency reserves -- some 60 million barrels over 30 days -- for only the third time since it was founded in 1974, to fill the gap in supplies left by the disruption to Libya's output...
The United States will provide half of the total volume to be released.
The decision caught energy and financial markets by surprise and generated criticism from oil companies, members of the OPEC oil-producing cartel and Republican opponents of the Obama administration.
Since oil prices already had fallen from early-May peaks near $115 a barrel, critics said the action appeared aimed at propping up President Barack Obama's popularity rating as much as helping consumers.
But Geithner, who met with local business leaders earlier on Friday in nearby Manchester before speaking at Dartmouth, said putting additional oil supplies on market was "sensible policy" that should give a lift to a slowly expanding economy.
"It will provide some modest help and relief" to the U.S. economy, Geithner told reporters afterward. "It was a prudent use of existing reserves."
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Riiiiiiiight.
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