Unemployment is still over 7 percent, the Fed has signaled the gradual end of its QE3 program, the stock market is retreating and the economy still remains deeply sluggish. Yet the price of oil remains at an exorbitant $95 barrel, totally without justification given the near-record inventories on hand and the booming production in the U.S. of 8.9 million barrels/day, not to speak of a significant pullback of gasoline consumption by American drivers. The price of oil, and in turn gasoline, continues on its clearly speculation-driven trajectory and is now higher by a factor of three from the $33/barrel quoted during the first month of the Obama presidency.
A significant break in the price of oil would be an enormous boost to the economy and bring earnings of oil companies more in line with those of the rest of American industry, rather than the fat and fatter bottom lines they have enjoyed these past four plus years.
Last year alone, U.S. crude production jumped 14 percent to the 8.9 million barrels/day total, a gain of 1.04 million barrels/day thereby making the U.S. the third largest crude producer in the world behind Saudi Arabia and Russia. Concurrently oil production in Canada increased some 7 percent last year thereby giving the North American continent an additional measure of security.
And yet, our government stubbornly continues to hold over 700,000,000 barrels of oil reserves in our Strategic Petroleum Reserve, a bounty of oil amassed during the nation's most vulnerable years as oil importer and now largely superfluous.
Yet the SPR could play a vital role in chasing the speculators away from the commodity exchange casinos and their 'roulette wheels' that have become the genesis of oil's price formation and bring prices back to levels reflecting true supply and demand. A stated policy by the government returning, say, 50 million barrels of oil from the SPR back into the market would stampede the speculators out of their gamed long positions and probably drop the price of oil $30 to $40 a barrel. Not only would it render enormous economic benefit to consumers through the length and breadth of the land, but also infuse the government's coffers with some $4.5 billion, monies that could be used to fund programs in dire need at this time of austerity.
After all, this massive holding of oil reserves was bought and paid for by all of us. Mr. President, we want our oil back!