Another Energy Band-Aid
Ending months of speculation, Energy Secretary Steven Chu announced last week that the Obama Administration will sell 30 million barrels of oil from the nation’s Strategic Petroleum Reserve (SPR) in an attempt to stabilize oil supply and prices. The option has been on the table since March, when the strife in Libya and a combination of global economic factors began driving up oil prices at a frightening pace. When gas prices hit $4/gallon, Washington responds – whether or not such a response will help.
The SPR, the world’s largest emergency oil supply, is designed as an insurance mechanism against supply shocks that drive up the price of gas. While current global unrest has had only moderate impacts on global oil supplies, the Administration decided – following months of high prices and political pressure – that the release was warranted heading into the most travel-heavy summer months.
Reactions were mixed, and the statement of Senator Jeff Bingaman (D-NM), a key voice on energy issues in Congress, is telling. Bingaman said last week, “This decision would have been more timely if made when the disruption in Libyan oil supplies first occurred. However, I hope it … settles prices back to levels where most experts believe they should be.”
Some advocates assert that the decisions “should provide an economic boost to the sagging American economy, and help relieve some pressure on American families too,” based on past experience wherein releases from the SPR drove down gas prices at the pump by 25-35 cents. Early market signals show that the decision might be working in terms of easing prices in the short-term.
Yet voices from across the spectrum have issued harsh criticism against the President for using this emergency reserve to tamp down a temporary price spike. “By tapping the Strategic Petroleum Reserve, the president is using a national security instrument to address his domestic political problems,” Speaker Boehner said in response to the news.
Boehner is not alone in his criticism. This will be the largest SPR release ever, but it is still expected to be less than two days worth of U.S. oil consumption. Many environmentalists see the decision as yet more evidence of the dangers of our national reliance on oil. If we are forced to tap into an emergency reserve every time there is geopolitical unrest, surely our reserves will not last – and we will remain vulnerable to global instability and price shocks.
Oil has been a hot issue in Congress this year, but rather than act to move our nation away from our dangerous and dirty oil dependence, the Senate failed to pass subsidy cuts for Big Oil and the House has thrice voted to expand offshore production. The constant conversation around energy issues shows that Americans realize that our current policy (or lack thereof) is failing. But releasing a small quantity of oil from our emergency reserves does nothing to address the root causes of this challenge, just as increased drilling can’t meet our long-term energy needs.
This price spike shows, once again, that now is the time to move past band-aids to the real cure: a sustainable energy system driven by a comprehensive, progressive national energy policy that supports clean, renewable energy and ensures that fossil fuel prices reflect their true costs – for our planet, our public health and our pocketbooks. That would be the truly strategic response.