Barack Obama is going along with the IEA, International Energy Agency, releasing 30 million barrels from the U.S. Strategic Oil Reserves. The IEA announced yesterday a release of 60 million barrels, half from America, to stabilize and lower crude oil prices. While the public excuse is decline in production due to unrest in Libya and the rest of the Middle East, the move is seen as what it truly is, Obama playing politics. With sagging poll numbers due to an anemic economy, Obama′s reelection in 2012 is becoming more doubtful.

strategic oil reserves

In April, crude oil prices hit $113 a barrel as unrest spread throughout North Africa and the Middle East. But since the global economy is slowing down, prices have been steadily dropping. After the IEA announcement yesterday, prices fell nearly $5 a barrel to just below $91. This morning, crude oil prices have already bounced back up to just over $92 a barrel, since the release is really not necessary, nor significant. The U.S. contribution of 30 million barrels is just two-days worth of oil consumption for America.

The Strategic Oil Reserves are intended to be used only in the event of an emergency. Created by an act of Congress in 1975 after the 1973 oil embargo, the plan was to store up to 700 million barrels, which was finally achieved in 2005. Over the years, there have been only three major releases from the oil reserves. Some 21 million barrels were drawn down during the Gulf War in 1990-91. Between 1996-97, 28 million barrels were sold outright to reduce Federal budget deficits. In 2005, 11 million barrels were tapped after Hurricane Katrina caused 25% of all oil production to be suspended for a short while. There have also been numerous, temporary loans due to events, such as pipeline disruptions or other hurricanes. Worldwide, the IEA sits on some 4.3 billion barrels of oil stored by its 26 member nations, including the United States.

The release from the strategic oil reserves by Barack Obama is seen as purely political. With our 30 million barrels, the IEA, International Energy Agency, release of 60 million barrels has had a short-term effect on crude oil prices. The excuse about doing this because of Libya is a weak one. There is no current emergency that justifies tapping into the oil reserves, unless you count Obama′s falling poll numbers.