The International Energy Agency, a body whose membership parallels the G-20 and which is dominated by members of the EU, announced that it may consider releasing more oil from "its stockpile" (1.6 billion barrels, nearly half of that in the U.S. Strategic Petroleum Reserve) at the end of the current 30-day, 2 million barrels per day period.
The IEA chose on June 23 to use the stockpiles held by its member states for only the third time in the agency’s 37-year history. Mr Tanaka said this decision was necessary because of the loss of Libyan production, which he said had deprived the market of a net 1.4m b/d, and the imminent return to service of many of the world’s refineries after a period of routine maintenance.
[Head of the IEA] Mr Tanaka acknowledged that Saudi Arabia was increasing its own oil output because of these factors. But he said this would take several weeks and the IEA’s move was designed to fill the gap. Mr Tanaka noted that 1.6bn barrels were held in reserve by the organisation’s members. “If we don’t use it now, then when?” he asked. [Emphasis added. Link may require registration.]
Well, the obvious answer is "You use it when you have an emergency." But there's no emergency. Crude oil prices have been falling in the wake of Our Libyan Adventure. Refineries reopening after routine maintenance? Not an emergency.
If the current situation constitutes an emergency, it sets the stage for the "continuing crisis" I described in my Sunday post, linked above:
A conniving president could, if I read the CRS study correctly, declare back-to-back emergencies eight times between today and the November 2012 elections.Eight times 30 million barrels is 240 million barrels. Take that away from the 727 million currently in inventory, and it leaves you with 487 million barrels, just under the statutory minimum volume of 500 million barrels.
That’s a half million barrels a day, on average, between now and the election. That’s enough oil to offset the production capability destroyed in the Gulf of Mexico by the Administration’s overreaction to the BP oil spill.
At today's prices, that's $22 billion (with a b) worth of electoral advantage that the President has to play with. The IEA gives him perfect cover to do it: "We're only cooperating with our partners."
The questions remain:
- What's the inventory value of the oil we'll be selling?
- When will we replace it, and at what price?
- What happens if we have a real emergency?
- Why not just bring the Gulf of Mexico back on full production?
Cross-posted at RedState.com.