Oil and Kerry

As gas prices continue to rise, John Kerry is trying to make them a political issue. He accuses Bush of not caring about the rising prices and their effect on "the average family". His first criticism is that the US should stop diverting oil to the SPR (Strategic Petroleum Reserve) because that siphons off oil from the general market and raises prices. This is complete nonsense not grounded in facts, but simply on politics. At present, the US diverts approximately 105,000 barrels per day to the SPR. That comes out to about one half of one percent of daily US oil consumption. Obviously getting rid of this would have zero impact on the market.

The second criticism is that Bush should release oil form the SPR into the market to try to reduce prices. As the American Thinker writes in this article:

"Taking crude oil from the SPR is certainly tempting. We tried this once before during the Clinton administration, and gasoline prices abated for a short time. It has been calculated that dumping oil into the market might lower gasoline prices a few cents per gallon. This would only be a temporary lowering of prices, and would not solve the underlying problems causing energy prices to increase."

Even more important, though, is that depleting the SPR could cause serious national security issues. A successful terrorist attack on a Saudi oil target, as was attempted at the Yanbu facility a few weeks ago, could be catastrophic to the US and world economy. By some estimates if such a successful attack were to reduce Saudi oil exports by 2.5-3 million barrels per day, oil prices could spike to more than $100/barrel, implying gasoline prices of more than double today's and quite possibly shortages like were seen in the 1970's. It would be very useful in such an event to have a 60 day reserve of oil, approximately the current reserve in the SPR.

So at this point, all of Kerry's suggestions are pure politics backed by no real facts or intelligent policy. And interestingly, the people screaming loudest about high prices and energy "independence" are the same ones who over the last few years have opposed any expansion of US domestic production. In the words of this Washington Times editorial:

Coming from a family that owns five palatial, energy-consuming homes, its very own Gulfstream II jet, a 42-foot powerboat, eight vehicles (including two Jeeps and a Chevy Suburban) and a Harley, Mr. Kerry has no standing when it comes to dealing with energy problems or the current surge in gasoline prices. Nevertheless, Mr. Kerry wants middle- and working-class Americans to believe that he truly feels their pain.
After having spent the past three years leading the Democratic opposition to the Bush administration's efforts to expand domestic oil supplier, Mr. Kerry needs to keep his hands off America's long-term strategic insurance policy.