The International Energy Agency defended its decision to put emergency reserves up for sale on the markets, arguing the halt to Libyan oil production was more detrimental than the disruption in the Gulf caused by Hurricane Katrina in 2005.
The sharp sell-off of oil stocks and a drop in futures sales yestreday appeared to stabilize today as the markets adjusted to the surprise announcement to release 60 billion barrels of oil, half of which will come from the U.S. Strategic Petroleum Reserve.
Richard Jones, the deputy chief of the IEA, told Reuters Insider TV that the loss of 1.5 million barrels a day of oil because of the revolution in Libya comes now at a bad time as refineries go on line for summer production.
"Now we're going into the summer driving season, those refineries which have returned to operation are about to ramp up their production," Jones said.
Skeptics and political detractors, however, accuse the Obama administration of dumping the oil to offset the sticker shock caused by $4 a gallon gasoline at the pumps as motorists face the summer vacation road season.
"The (Strategic Petrolium Reserve) was created to mitigate sudden supply disruptions," said House Speaker John Boehner (R-Ohio). "This action threatens our ability to respond to a genuine national security crisis and means we must ultimately find the resources to replenish the reserve – at significant cost to taxpayers."
While U.S. gas prices are forecast to dip at least 20 cents on average, Jones suggested there was no pressure from the Obama administration to release the oil. "All 28 countries were approached with the plan and not one country opposed it," he told Reuters TV.
On another front, the Federal Trade Commission this week announced it will investigate whether U.S. refineries are responsible for the price hikes at the pump the past few months.
Showing posts with label strategic oil reserves. Show all posts
Showing posts with label strategic oil reserves. Show all posts
Friday, June 24, 2011
Libya or Politics, Selling Oil Reserves Win for Consumers
This is not really a Libya story, though the White House would like it to be.
The surprise move to put on the market 60 million barrels of oil gave the financial markets a boost and will likely help some middle class Americans load up the beach wagon and give their families a vacation after all.
Mostly it left President Obama's political enemies here at home red-faced over the mostly symbolic move -- 60 million barrels would fuel the world for less than a day.
Still, Obama's political detractors know they cannot really attack a program that ultimately is meant to help American consumers. The Democrats would love nothing more than to run ads of Republicans squeaking about how wrong it is to try lower prices at the pumps.
The best the yammerers at Fox could do is bloviate about the need to tap more oil wells, even though U.S. oil fields are more active than they have been in 20 years. So that line of attack is not impressive for the bomb-lobbing reputed house organ of the GOP and Tea Party.
But more importantly, it left OPEC wondering what else the U.S. and the International Energy Agency have up their sleeve to fight back against their price gouging. Iran, which is trying to wrest the de facto seat at the head of the oil cartel away from U.S. ally Saudi Arabia, was out-smarted, at least for a little while. Iran is taking the lead in opposing oil output.
As for the crooked oil marketeers here in the U.S., the Justice Department is looking under every stone for the slimy greed monsters who would stick it to Americans for the sake of profits. Attorney General Eric Holder would love to make an example of a gasoline distributor rip-off artist.
The U.S. and IEA blame the shutdown of Libya's oil production as the biggest reason for flooding the oil markets with the reserves. It will likely be at least a month before Libya's refineries are fired up again and the rebels are able to ship oil.
"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," Energy Secretary Steven Chu said.
Even if it is a bit of a "dog ate my homework" excuse, it will likely take the heat off the cash-strapped middle class Americans and how can anyone in the U.S. complain about that.
The surprise move to put on the market 60 million barrels of oil gave the financial markets a boost and will likely help some middle class Americans load up the beach wagon and give their families a vacation after all.
Mostly it left President Obama's political enemies here at home red-faced over the mostly symbolic move -- 60 million barrels would fuel the world for less than a day.
Still, Obama's political detractors know they cannot really attack a program that ultimately is meant to help American consumers. The Democrats would love nothing more than to run ads of Republicans squeaking about how wrong it is to try lower prices at the pumps.
The best the yammerers at Fox could do is bloviate about the need to tap more oil wells, even though U.S. oil fields are more active than they have been in 20 years. So that line of attack is not impressive for the bomb-lobbing reputed house organ of the GOP and Tea Party.
But more importantly, it left OPEC wondering what else the U.S. and the International Energy Agency have up their sleeve to fight back against their price gouging. Iran, which is trying to wrest the de facto seat at the head of the oil cartel away from U.S. ally Saudi Arabia, was out-smarted, at least for a little while. Iran is taking the lead in opposing oil output.
As for the crooked oil marketeers here in the U.S., the Justice Department is looking under every stone for the slimy greed monsters who would stick it to Americans for the sake of profits. Attorney General Eric Holder would love to make an example of a gasoline distributor rip-off artist.
The U.S. and IEA blame the shutdown of Libya's oil production as the biggest reason for flooding the oil markets with the reserves. It will likely be at least a month before Libya's refineries are fired up again and the rebels are able to ship oil.
"We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery," Energy Secretary Steven Chu said.
Even if it is a bit of a "dog ate my homework" excuse, it will likely take the heat off the cash-strapped middle class Americans and how can anyone in the U.S. complain about that.
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