The Oil and the Glory

Republicans won’t like it, but why Obama will release stockpiled oil anyway

Republicans won’t like it, but why Obama will release stockpiled oil anyway

Look for President Barack Obama to order a significant release of oil from the Strategic Petroleum Reserve, the emergency stockpile held by the federal government. At most, it may trigger a short-lived drop in today’s high gasoline prices. But Obama is battling history: Since Richard Nixon, gas prices have snuck up and startled otherwise occupied presidents, and led them into a flurry of actions that, while usually ineffective, have the virtue of making them look like they are doing something. Now is Obama’s turn at the rite.

In a news conference yesterday, Interior Secretary Ken Salazar reached further into the past, noting that "all the way back to 1857, but bring it into the post-World War II era, you see the price shocks for both oil and gas that have occurred in this country and the different responses that are made." Salazar might have added that this vexing malady has afflicted not just U.S. leaders, but presidents and prime ministers around the world, most recently Nigerian President Goodluck Jonathan (and, pictured above, British Prime Minister David Cameron).

But the pursuit of sanctuary in history will do little good at the ballot box: Fresh polls in the New York Times and the Washington Post suggest that gas prices might be contributing to a drop in Obama’s approval numbers. Though Obama spokesman Jay Carney yesterday assured reporters that "the Administration is not focused on polling data," that is belied by an outbreak of news conferences by members of Obama’s team. The White House also yesterday released an update on its energy policy.

Obama’s opponents have the knives out. One accusation is that Obama has manufactured high prices to encourage motorists to buy electric cars, to which Carney told reporters:

That is categorically false. This President is absolutely committed to reducing — to doing everything we can to mitigate the effect of higher gas prices on American families and to lower gas prices. What he is not willing to do is to look the American people in the eye and claim that there is a strategy by which he can guarantee the price of gas will be $2.50 at the pump. Any politician who does that is lying, because it just — that strategy does not exist. It is a simple fact that there is no such plan that can guarantee the price of oil or the price at the pump.

Carney is right. The truth is that, if every motorist in New York and Los Angeles parked her or his car and stopped driving, that would result in a massive surplus, and lower gasoline prices. But short of something similarly dramatic in the market, nothing that Obama does will lower gasoline prices this year, nor next and probably 2014 as well — not a decision to open more federal land to drilling, nor more encouragement of renewables.  

Which does not mean that, say, in the heat of the summer, Obama won’t reach for some more tools at hand, suggests Michael Klare, whose new energy book, The Race for What’s Left, is out today. Klare told me by email:

Assuming gasoline prices continue their relentless upward climb, President Obama will be forced to release oil from the [Strategic Petroleum Reserve], especially if he can point to some international developments to justify the move — increased tension in the Middle East, mounting violence in Nigeria, and the like.  Also, expect him to give full approval to Shell’s drilling this summer in the Chukchi and Beaufort seas off Alaska, and accelerated drilling in the deepwater Gulf of Mexico. You might also see him give tentative approval to offshore drilling off the coast of Virginia.

But wouldn’t these be just political gestures with no actual impact? Klare:

Releasing oil from the [Strategic Petroleum Reserve] would have a modest temporary effect, but the other moves will have no immediate effect and will only be for political show. He is under enormous pressure to respond to Republican taunts that he is not doing enough — both to lower prices and generate new jobs.

For the record, the petroleum reserve, called the SPR for short, currently contains about 695 million barrels, short of its 727-million-barrel capacity because Obama released some 30 million barrels last summer during the panic over Libya.

I asked Michael Levi, who runs the energy shop over at the Council on Foreign Relations, what he thinks of such forecasts.

I’m not sure whether they’d go for an SPR release right now — it’s a complicated calculation. An SPR release would lower gasoline prices in the near term, but its longer term impact (even later this year) would be unclear. By deterring people from putting oil into private stocks, it could leave the economy more exposed to later shocks. None of the other steps would lower gas prices this year.

Yet that is not the calculus. Voters, regardless of their nationality, often will give an incumbent the benefit of the doubt for trying. It is when they see nothing being done that they seethe.