Austan Goolsbee is no longer on the Obama administration’s payroll, but he is still quite capable of carrying its water. In this Wall Street journal piece, Goolesbee argues that the Strategic Petroleum Reserve has just too darn much oil in it. But releasing the oil has nothing, nothing at all, to do with the politics of gasoline prices:
Keeping the extra oil in the Strategic Petroleum Reserve is a form of insurance policy and so it isn’t free. If we reduced the reserve to 510 million barrels from 696 million barrels, the sales would bring in more than $20 billion to the Treasury. Are taxpayers really getting $20 billion worth of value from having an extra 25 days worth of those oil imports sitting in a salt mine in Louisiana?
You see? Releasing the oil is about getting rid of excess ‘insurance’ we just don’t need because imports are down. Why pay to fill up the reserve — or buy more insurance — when we could monetize the existing supply and reap a windfall? It makes perfect sense.
Nevermind that the $20 billion or so of proceeds Goolsbee projects wouldn’t cover the March interest payments on the federal debt.
What we really have here is a trial balloon. A former administration economist makes a case that we just don’t need all that oil in the reserve and should sell some of it (for purposes unknown). Oh, and we should do it before oil prices fall, because that’s just around the corner:
…we wouldn’t release that much of the reserve all at once (or even as fast as physically possible). We would need to coordinate with our allies and suppliers. We would not want to make releases if speculators or other countries were planning to buy it up and hold it in their own reserves. But we might consider sales in periods where the futures market suggests prices will fall in the future—as is the case right now.
Funny how this argument crops up in 1) an election year and 2) right before the summer driving season, when prices tend to rise.
But look for this argument to gain greater currency in the weeks ahead.
