On Thursday, the Obama administration announced its plan to tap into the Strategic Petroleum Reserve to aid the world oil market.
According to the Wall Street Journal, there is evidence this had been planned for a while, and the U.S. even sent a delegation to Saudi Arabia to discuss this plan ahead of time.
Gasoline prices surpassed $3 in January, and in February tensions in Libya stirred up, diminishing their output by 1.5 million barrels a day soon after.
The oil markets felt this blow, and it called for discussion of how to repair the supply and demand ratio.
You may remember the outcome of the OPEC meeting in Vienna on June 8, when the twelve nations could not reach an agreement.
You may also remember the Saudis’ decision to increase output by 1.5 million barrels a day to cover Libya’s production downturn, ignoring with ostentation OPEC’s decision to retain current output.
Well, the U.S. may have had a hand in all of this, just as the Saudis seem to be connected to the U.S. reserve tap.
Barack Obama, after contacting Saudi Arabian King Abdullah, sent a secret delegation to the OPEC nation in early May to discuss the possibility of tapping U.S. reserves, according to the Wall Street Journal.
Even earlier, Reuters said, the Saudis and U.S. had discussed a possible swap from the U.S. reserves.
The U.S. would release light, sweet crude from the Strategic Petroleum Reserve to European refineries, and in exchange the Saudis would sell at discount their heavier crude to replenish the tapped reserve.
This plan never came to fruition, however, and talk of it was dropped.
So what does all this mean for the U.S. and oil?
Well, for one, it seems that we are more dependent on the Saudis than we’d like to think.
It also appears the government is quite reluctant to let the public know just how dependent we really are.
We actually had to ask permission from the Middle Eastern nation to tap our own reserves.
And we have been putting pressure on OPEC nations to increase output.
We really want that foreign oil.
With all the GOP candidates rooting for energy independence, it seems like it must be a possibility in the not-too-distant future.
But how close can it be when our nation is scrounging for that crude?
Republicans aren’t happy with the reserve tap, especially when we have so much natural gas waiting to be released in our own nation. They want the digging restrictions to be reconsidered.
But there are still so many environmental implications to research.
As we head into summer and the peak driving season, that wouldn’t happen fast enough.
The reserve could at least help keep prices down.
But it makes independence seem like a fantasy.
That’s all for now,