Scroll down a bit in this wrap-up of last weekend’s G8 Summit from The Hill newspaper, and you’ll see that the president and other G8 leaders hinted that they might ask for a draw on the world’s oil reserves to offset disruptions in supply from Iran. Their statement:
“There have been increasing disruptions in the supply of oil to the global market over the past several months, which pose a substantial risk to global economic growth. … Looking ahead to the likelihood of further disruptions in oil sales and the expected increased demand over the coming months, we are monitoring the situation closely and stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied.”
The Hill says the White House was mum on whether the U.S. Strategic Petroleum Reserve might be tapped. Even so, we’ll take the point implied in the G8 statement, that increasing world supply has some positive effect on the global crude markets – which drive prices at the gasoline pump.
Though the administration’s usual response to tightening in the global markets has been to talk about reducing U.S. demand, the fact that the president has visited with G8 leaders about increasing supply from reserves suggests he believes, as we do, that supply matters.
Republican presidential candidate Mitt Romney:
“The G8 is right. An increased supply of oil would help to promote economic growth, reduce prices, and strengthen our hand in confronting Iran. Unfortunately, President Obama has taken precisely the opposite approach and continues to stifle our domestic production and our access to Canada’s resources, while looking to our strategic petroleum reserve each summer to make up the difference. … If he agrees that increased supply is good for America, he should take immediate action to approve the Keystone pipeline, accelerate production in the Gulf, and open new federal lands and waters for development.”
Instead of an emergency draw-down from the strategic reserve, policy should be focused on developing long-term, stable sources.
Construction of the Keystone XL pipeline would bring upwards of 830,000 barrels of oil per day from a reliable source and ally, Canada. Oil output in the Gulf of Mexico continues to struggle against administration policies that basically flattened out production the past two years, putting us way behind where we were forecast to be (see chart). New policies are needed to open up federal lands, about 60 percent of which remain off limits.
All of these policy actions are ours to take. Needed is the political will and leadership necessary to develop American resources for America.