Obama Needs to Man Up and Open the Strategic Reserves

If I were President Obama, I would declare a “state of emergency” and open the taps of the strategic reserves to allow oil to flow freely until the speculators were pushed out of the markets and prices dropped below 100.00 and I would draw a line in the sand. Recently the Swiss National Bank was forced to do sometime similar to defend the Franc.

When there is no economic reason for the price of oil to be this high (106.), then it is just the greed of speculators.

I have read recently many editorials and opinions on both sides of the fence, two weeks ago when President Obama suggested new regulation s and powers to control speculation in the energy markets, investors were in an uproar. Commentary and editorials were being published full out..

Now a few days have passed, The Iranian embargo is still in effect, the geopolitical tensions have subsides, the April 13^th summit was deemed a success and a second meeting is scheduled for later this month.

Inventories in the US are unacceptably high, demand continues to drop and production is going to build a glut in the marketplace. At present there is an armada of tankers headed to Asia to provide all their needs.

Extra crude from Iraq and Saudi Arabia has helped cover for tighter sanctions on Iran, making OPEC’s April output is its highest since 2008, a Reuters survey found Monday.

A long-awaited expansion in Iraq’s oil export capacity and steadily climbing output from top world exporter Saudi Arabia are cushioning the impact of a European Union plan to embargo Iran’s crude, which has helped support oil prices this year.

The fact that we are getting additional supply from Iraq and continued high output from Saudi Arabia, the UAE and Kuwait does make it easier.

April supply from the 12-member Organization of the Petroleum Exporting Countries averaged 31.75 million barrels per day (bpd), up from a revised 31.32 million bpd in March, the survey of sources at oil companies, OPEC officials and analysts found.

OPEC’s total is the highest since September 2008, which was shortly before it agreed to a series of supply curbs to combat recession and collapsing demand.

Last week, the EIA reported well above forecast supply inventories, with excess inventory for the past 3 weeks.

The US economy and the US recovery are tied very closely to the cost of energy, especially crude oil. The US economy cannot afford to pay prices over 100.00 per barrel, especially when it is not necessary. The price of gasoline at the pumps, affects the economy in numerous ways, non positive. High gas prices, cause negative consumer sentiment, push up inflation, reduce consumer spending, increase manufacturing costs and transportation costs and therefore hinder the creation of jobs.

This is a national emergency almost equal to financial terrorism. Greed is not capitalism; speculators do not have the right to put themselves and profits above the future of the economic growth of a country.

I say, Mr. Obama, open those taps, use the strategic reserves for what they were meant for. Crush the greed out of the speculators who look only at short term profits and not longer term financial health. These are the same speculators who caused the housing crisis, the mortgage crisis and the banking crisis. They need to be stamped out.