Las Vegas Sun

March 28, 2024

The Policy Racket

Obama’s move to lower pump prices leads to GOP criticism

Hurting at the pump? The President took a step today that will do something about that. But it’s a step critics accuse plays dangerous politics with the country’s petroleum reserves.

The Obama administration announced this morning that the U.S. would be releasing about 30 million barrels of oil from the country’s Strategic Petroleum Reserve over the next month, while U.S. partners in the International Energy Agency will release another 30 million, all over the next thirty days.

“This decision should calm the markets, lower prices and provide some relief for Americans whose wallets are already strained by record prices at the pump,” said Senate Majority Leader Harry Reid, welcoming the news. “At a time when families in Nevada and across the country are struggling to make ends meet, it is crucial that we do all we can to lessen the impact that turmoil in the Middle East has here at home.”

But it’s not the first time Reid’s had differences with Republicans about how best to combat runaway gas prices.

“Everyone wants to help the American people and lower prices at the pump,” said House Speaker John Boehner. “But by tapping the Strategic Petroleum Reserve, the President is using a national security instrument to address his domestic political problems...There is a better way: we need a sensible energy policy to increase the supply of American energy.”

It’s true that the SPR is supposed to be for emergency disruptions, and does have to be replenished at taxpayer expense, though given that the reserve is at record-high levels, it’s not clear how much of the 30 million barrels that will be extracted have to be replaced, and how soon that will have to happen.

But Obama’s announcement wasn’t just about the release of strategic reserves. That release is taking place concurrently with a ramp-up in production from Saudi Arabia and the five other countries of the Gulf Cooperation Council. They have also agreed to increase production by about 1.5 million barrels per day, approximately offsetting what’s been lost from the market over the crisis in Libya, where the U.S. and NATO are currently assisting local rebels fight the regime of Moammar Gadhafi, the country’s longtime dictator.

But it’s not a clean trade-off, as not all oil is created equal. Libya’s product is light, sweet crude, while that which comes from the Gulf states is sourer; and the sourer the oil, the more refining it takes to ready it for commercial use. That means the petroleum that the GCC states are upping their production of is more expensive once it hits the pump.

We’re talking pennies on the gallon, of course -- but in this climate, where recession is meeting politics, every cent counts.

In Nevada, there’s not much oil to extract from the ground. But the country’s dependence on foreign oil has palpable effects close to home, making the national energy dilemma of drill, diversify, or both, a pertinent debate in the Silver State.

Nevada’s possibly the best example of what’s going to be Obama’s hardest test come next November: if the economy’s on the mend, he’ll stand a better chance of being reelected. But the Obama administration’s been squirming a bit in the last few days over reports that show the economic recovery going slower than most top financial officials expected.

The average price of oil in Nevada is perhaps the one thing that isn’t nation-leading in terms of negative economic indicators. The vast bulk of Clark County falls in the very middling range $3.53-to-$3.62 per gallon, according to national gas price tracking software from GasBuddy.com.

But with the whole country paying well over $3 per gallon for gas, even slight changes in price can cause a panic, especially as we head into summer, when prices traditionally climb with peak usage.

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