Why is Obama tapping the Strategic Petroleum Reserve, really?

Within the next 24 hours, the nation’s refiners will be asked to bid on some 30 million barrels of oil President Obama is releasing from the Strategic Petroleum Reserve.

Even before the first barrel has been refined, Republicans and Democrats are taking opposite sides on the issue. The Republicans call it bad policy to use the oil in a non-emergency and would rather see more permits issued to drill for oil. Democrats are hailing the move as a way to bring relief to the middle class.

Yes, call this a matter of oil and politics mixing.

“Of course this is a political decision – these guys are trying to save their jobs,” says Phil Flynn, director of research at PFG Best, a commodities brokerage house in Chicago. “Every move is political when the economy is in trouble.”

In a conference call with reporters, administration officials argued the disruption in Libya and other areas in the Middle East warranted the release, especially because those areas produce light sweet crude, which is used to produce gasoline. They said they had been talking to the other 27 members of the International Energy Agency – which is composed mainly of the world's developed countries – about this move for weeks. Other IEA members will release an additional 30 million barrels of light sweet crude from their stockpiles as well.

“They didn’t do this willy-nilly,” says Mr. Flynn. “They waited to see how the war would develop.”

Administration officials maintained the action was not taken to lower gasoline prices and in their briefing with reporters refused to discuss or predict what action the move would have on prices. Later, Jay Carney, White House spokesman, said the timing of the action was related to a rise in demand during the summer driving season.

“What we are addressing is an impact caused by a supply disruption, and at this time it's necessary to do it because we're about to enter a season when demand is at its highest," said Mr. Carney.

However, some oil industry groups assailed the move, calling it a short-term fix at best. “It not only reduces our capacity to protect ourselves in case of a true emergency in the future, but also increases America’s reliance on the politically volatile countries that currently provide most of our oil,” says Barry Russell, the president of the Independent Petroleum Association of America, a lobbying group in Washington in a statement.

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