Foreign Policy
As oil prices ticked above $115
per barrel last week, a White House leak revealed that President Barack Obama
may dip into the Strategic Petroleum Reserve (SPR), the United States' 695
million barrel stockpile of emergency fuel supplies. The leak might have been a
signal that Washington wants Gulf countries to take action to lower oil prices.
It might also have been an attempt to wring the risk premium out of current
prices by reassuring the market that America won't let a potential war with
Iran shut off the spigot. The one thing we can say for sure is that the
announcement highlights two interrelated problems with U.S. energy policy: that
every president since Ronald Reagan has used Saudi Arabia as his de facto SPR
and that there exist no clear standards for when to dip onto the actual SPR. Both
problems have the potential to bite us -- badly.
