Sunday, June 14, 2009 | 2:03 a.m.
If the Organization of Petroleum Exporting Countries can openly flout the free market to manipulate oil prices, why can’t the United States do the same?
What the U.S. needs is a second Strategic Petroleum Reserve used specifically to manipulate oil prices.
Every consumer knows that the price of oil is highly cyclical. Every winter the price drops, as driving demand lowers, and in warm winters the prices fall even more, as demand for home heating oil decreases. As Americans take to the roads for vacation every summer, the price of oil shoots up.
It is simple economics: Buy low and sell high.
The U.S. has a reserve of 722 million barrels of oil, used as an insurance policy against any oil embargoes. We need a second reserve of 600 million barrels to be used when oil prices spike. The oil would be stockpiled in the winter when prices are comparatively low. The U.S. could then release about 6 million barrels a day from Memorial Day to Labor Day, meeting about 30 percent of U.S. daily demand.
A realistically low $10 profit per barrel would net $6 billion, allowing the government to invest in oil consumption-reducing programs such as converting homes in the Northeast from oil-heating to wood pellet stoves, changing the government vehicle fleet to hybrid and electric vehicles, and investing in infrastructure and technology for electric and hydrogen vehicles.
Yes, we are a free-market capitalistic society. But if others don’t play by the rules, why should we?