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Tapping Strategic Oil Reserve Won’t Work

President Obama has been backed into a tight political corner over rising gas prices. While it’s true that the president has little control over present gas prices as they currently stand, it’s also true that he’s made some high-profile blunders on energy policy during his first term, which makes him an open target for public blame. The Hill’s latest poll finds that a whopping 58 percent of American voters say Obama’s policies will lead to higher gas prices:

On energy, 58 percent say Obama’s policies will result in gasoline prices increasing, while just 20 percent expect them to cut prices — and by a 46-percent-to-36-percent margin, voters believe they will cause the United States to become even more dependent on foreign oil.

Voters’ wide-ranging pessimism comes as gasoline prices have risen sharply, which often dampens attitudes among U.S. voters toward those in power, and as opinions remain sharply divided on the president’s healthcare law.

Obama is setting out on a campaign tour to defend his energy policies this week, but his tools for dealing with the public anger are minimal. He’s been playing up his support for domestic oil production, but his recent rejection of the Keystone XL pipeline squashes that message. He’s pushing for an end to tax subsidies for oil and gas companies, but that will do nada to reign in gas prices and has more to do with his personal views on “fairness” than anything else. Republicans are also sure to point out that if raising taxes on oil companies has any impact on gas costs whatsoever, it’s more likely to raise the price at the pump.

The one big option Obama has, and the one that liberal Democrats have been lobbying for, is for him to tap into the strategic petroleum reserves. As I wrote on Friday, this would be a blatantly political move that could end up backfiring phenomenally  on the president.

And the political backlash is likely to be much greater than the political gain. There’s no way to predict exactly how the release of reserve oil would impact the market, but if history is any indication, the effect on gas prices has diminished each time the reserves have been tapped into. At the Washington Times, Stephen Dinan writes:

Last June, when President Obama last ordered a release from the U.S. reserves, oil was trading at $95.41 a barrel. It dropped about $5 over the next few days, but quickly shot back up and two weeks after the announcement the price was right back where it was before the release was announced. …

Democrats said a 1991 oil release in the middle of the first Gulf War dropped prices at the pump by 33.4 percent, and said a 2000 release by President Clinton lowered prices by 18.7 percent. President George W. Bush’s 2005 move to stop filling the reserve dropped prices 9.1 percent.

Those numbers showed declining returns over the years, and analysts said that is one reason why Mr. Obama’s recent release didn’t have much lasting effect at all: The world market is far bigger than it used to be, thus the release of U.S. reserves has less impact.

Breaking into the strategic petroleum reserves for a two-week drop in gas prices? It’s such a joke that I can’t imagine Obama would ever take the risk. And for those who think the public wouldn’t notice the president playing political games with the reserves, William Galston at TNR notes that Al Gore was shredded for proposing a similar idea during the fall of 2000. Another reason to be skeptical that Obama would actually go ahead with this plan.


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