Release Of SPR: It’s What We Do In Election Years

Click to enlarge:

Source: Bianco Research

The chart above shows the amount of oil in the Strategic Petroleum Reserve (SPR).  Highlighted on the chart above are the five releases of oil from the reserve.

In 1996 and 2000 these releases occurred during the presidential campaign season for what seemed like no urgent need.  The other three occurred because geopolitical events or weather disrupted supply – 1990 (Desert Storm), 2005 (Hurricane Katrina) and 2011 (Arab Spring with Libya going off-line).

Based on the story below, it sounds as though this is nothing more than politics during the election season.

Reuters.com – Exclusive: White House dusting off plan for potential oil release
The White House is “dusting off old plans” for a potential release of oil reserves to dampen rising gasoline prices and prevent high energy costs from undermining the success of Iran sanctions, a source with knowledge of the situation said on Thursday. U.S. officials will monitor market conditions over the coming weeks, watching whether gasoline prices fall after the September 3 Labor Day holiday, as they historically do, the source said. It was too early to say how big a drawdown would be from the U.S. Strategic Petroleum Reserve and, potentially, other international reserves if a decision to proceed was taken, the source said. Oil prices have surged in recent weeks, with Brent crude prices closing in on $120 a barrel, up sharply from around $90 a barrel in July. The United States and other Group of Eight countries studied a potential oil release in the spring but shelved the plans when prices dropped. With prices high again, U.S. officials were now collecting information from the market about potential needs and studying futures, production numbers and data on Iranian oil exports. “The driving force in this is both impact on the economy and impact on the Iran sanctions policy,” the source said, noting that Washington did not want rising oil prices to create a windfall for Iran while oil embargo and international sanctions were having an effective impact. The United States has yet not held talks with international partners about a coordinated move. The source noted that Britain, France, Germany and other partner nations in the Paris-based International Energy Agency were receptive to a potential release a few months ago when conditions were similar.

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Max Konzelman
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