Listen to this commentary

Bad enough, in my view, that the U.S. announced yesterday that it would release 30 million barrels of oil from its Strategic Petroleum Reserves (‘SPRs).  Collectively 27 other nations have agreed to release a further 30 million barrels from theirs.  Read ‘Surprise Oil Release by IEA Rattles Markets, Investors‘ – reading time 3 minutes.

The International Energy Agency (IEA) on behalf of the 28 program participants released this decision yesterday.  It seems to me either to be a ‘ridiculous band aid’ that can only draw crude oil prices down on a very short-term basis, or is a move that portends something far more problematic than U.S.$100 crude oil prices.  Frankly, I don’t understand it.  60 million barrels of oil is neither ‘here nor there’ in the context of the aggregate 4 billion barrels of SPRs reported in the article.  Likewise, 30 million barrels of oil is not a lot in the context of U.S. daily domestic consumption.  The IEA is quoted in the article as saying “Greater tightness in the oil market threatens to undermine the fragile global economic recovery”.  This strikes me as being a sensible view of things.  However, since when did any sensible person go into a firefight with a squirt gun when all other participants were shooting real bullets?

Looking at this from a U.S. perspective, it strikes me as plain loony that President Obama and his band of merry men and women could believe they could gain any meaningful political currency from such a move – a move that may indeed move gasoline prices in America a few cents lower at the pump for a short period of time.  The Presidential election is 16 months away, and with all the economic events I think likely to unfold between now and then I see no chance this one event will be remembered Main Street Americans when they vote in November, 2012.  So why do this at all, but to try to kick the ever-increasingly battered’ can a step or two further down the road?

U.S. preliminary jobless numbers were higher again yesterday, and last week’s jobless rate numbers were adjusted upward.  Consider this in combination with my commentary today on Mr. Bernanke’s current views of America and the world.  Intuitively, I am seeing things unraveling at an increasing pace.  I suggest you read this article, get up to 10,000 feet, and think about whether you agree with me.

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