2012 Campaign Season has Arrived: Obama Releasing 30M Barrels from SPR

From the Washington Post:

Wary of a new surge in gas prices, the Obama administration said Thursday it is selling off 30 million barrels of oil from the country’s emergency reserves as part of a broader international response to lost oil supplies caused by turmoil in the Middle East and North Africa, particularly Libya.

The release from the U.S. Strategic Petroleum Reserve will be the largest ever, amounting to half of a 60 million-barrel international infusion of oil planned for the world market over the next month.

"Particularly Libya." Really? Libya's not even a player in the U.S. oil markets, accounting for less than 1% of imports and therefore less than a 0.5% of the supply here. That's what we call a "negligible" amount.

Why tap the Strategic Petroleum Reserve, a stockpile of oil that is supposed to only be available during true emergencies? A much more sane approach would be to allow more domestic off-shore and on-shore drilling. A 30M one-time influx of oil will not have any real effect on the market.

You know how this is going to be played in the days leading up to the election. He'll say that he tapped the SPR in an effort to increase supply and therefore decrease prices and the impact on the average American's wallet, but those dadgum "speculators" kept the prices elevated.

The same type of political positioning goes on with domestic drilling. The GOP keeps calling for relaxed regulations on domestic drilling (which I agree with) but try to sell it like the oil companies will start drilling and drilling and drilling. But if you think about supply and demand, something kind of pops out. Businesses are in business for one thing: profit. In all business, supply and demand has a great effect on how you operate. In the case of oil, demand is always nearly maxed out because there are not any currently viable alternatives.

The best way of keeping your profit margin strong is to charge the maximum amount that the market will bear. In the case of any commodity with demand always near its maximum, that's really any price. The people who cry that oil is too expensive at anything above $35 or $40 a barrel have zero understanding of economics.

So where am I going with this? Oil companies blame the Democrats for "not being able to drill" while the Democrats keep tight regulations in place to appease the "environmentalists." In reality, it's a win-win situation for both "sides." If I produced a commodity that had near maximum demand, I would do everything I could to keep supply limited and keep the demand ratio high. If a group of politicians want to take the fall as the reason that supply stays limited, then I'd gladly accept that and talk about how they are not letting me help the consumer. This is all with a wink and a nod, of course.

The only way around such a situation is to legally force the companies to drill either by production quotas or all-out nationalization. I support neither.