Obama's Release of Oil from the SPR

I needed to noodle the release of Oil from the U.S. Strategic Petroleum Reserve for a few days (and I have been under the weather... which tends to slow my noodling).  CNNMoney had this not too dumbed down article recently:

Four reasons are emerging for President Obama's surprise decision Thursday to release 30 million barrels of oil from the nation's strategic reserve -- economic stimulus; a looming supply shortage; a wake up call to OPEC; and a warning shot to speculators in the oil market.

I think that that line of reasoning is essentially correct... so lets take it apart one item at a time, but in reverse....

1. "A warning shot to speculators in the Oil market." Hmmmm..... This is so wrong on sooooo many levels... but OK, we live within a body politic filled with dingbats and dumbbells... true believers and complete deniers... wing nuts and fruit loops.... Here's my take:

Our command economy control freaks have undertaken an incredible effort to stimulate the economy (most of these efforts are doomed to fail or have a cost/benefit ratio f***ed up beyond recognition). Some of this attempt at command and control had some unintended consequences - just take a look at the US$ - and so the control freaks think they can micro manage aspects of their efforts to increase speculative activity that they find unappealing - even if there is only (and barely) circumstantial evidence that the original efforts to increase risk appetite were the driver behind Oil prices - by driving out speculators??  After all, energy was one of the worst performing sectors in the commodity markets... WhoTF is advising these people? Commodity trading is a Zero Sum Game. For every buyer there is an equal and opposite seller. The market price will ALWAYS get to equilibrium eventually via the supply/demand price discovery between producers and consumers. Reducing the number of trades in between Exxon and Mrs. Smith will absolutely, positively not change the AVERAGE outcome of price... it WILL, however, increase the volatility in the market price... which might have the unintended consequence of reducing risk taking at the Exploration and Production level.

Politically, these knuckleheads have been able to label "speculators" as the evil doers... so this might appeal to the non-thinking viewers of the likes of Oprah and Nancy Grace.

2. "A wake up call to OPEC". ROFL!!! OPEC is keenly aware of their precarious position - there ain't a damn thing they can do about it. IF, and its a BIG IF, OPEC has ANY spare capacity at the moment it almost assuredly is in The Kingdom of Saudi Arabia, and KSA has already said they are going to increase production... my bet is that that was just propaganda... and we will know the truth soon enough.

I am quite sure that a "Wake up call to OPEC" was not part of the administrations thinking... or at least I hope not. While the ruling OPEC's elite might benefit from selling the West and the BRIC's their oil as fast as they possibly can under NO CIRCUMSTANCE is this in the interests of the PEOPLE living in the OPEC countries. The West's ongoing War with Islam has been the predictable result, and the Arab Spring is just the latest chapter in this ongoing saga.

3. "A looming supply shortage". We need a definition for "shortage". There will be no shortage of $150, or $200, or $300 per barrel Oil... and no $100 per barrel Oil to be found. There will be no "shortages" unless governments attempt to ration by inconvenience.  If "rationing" occurs by price, the market will handle everything... now you might not like that; you might have to drive fewer miles and in a smaller car and live in a smaller dwelling and grow your own food and share bath water... amongst all manner of other adjustments. But you will adjust. The problem for the Federal, State and local governments is that this will simply destroy their budgets. The good news is that the "smaller government" folks are going to win by default without having to throw a single punch.

4. "Economic Stimulus". This is just too silly to even address. The amount of Oil in the SPR might, MIGHT, get these folks through the 2012 elections... and then what? Is our economy "stronger" by destroying contingency funds? "I fart in the general direction" of this one.

In the final analysis, this is just another cluster f*** coming out of the 2 Headed 1 Party (2H1P) Monster that has been eating us alive since the end of the Civil War... but the fat is gone, the muscle is gone, and the Monster is gnawing at the bone of the U.S. Strategic Petroleum Reserve.