This week President Obama was out stumping against rising gas prices once again as he prepares for the November election. The latest tactic from the president involves his recent approval of oil exploration off the Atlantic coastline -- and you'd better believe he will use the move as an election tool in response to the nation's skyrocketing gas prices.
But if you actually delve deeper into the framework, it quickly becomes apparent Obama's "oil exploration" will have zero impact on gas prices anytime in the near future.
The five-year study looks into drilling for oil off the coast of the eastern portion of the U.S. That is right -- looks into drilling -- not actually drilling. The president is, once again, using a headline to create a buzz, but in reality nothing gets accomplished. In reality, the President banned drilling sites off the coast of Virginia during his term that has led to less oil production and cuts in energy-related jobs.
More rhetoric from Obama regarding oil prices has focused on the Strategic Petroleum Reserve (SPR), the 700 million barrels of oil that are supposed to be kept for emergency situations when oil spikes to levels that threaten the economy. There is no surprise Democrats and Obama are leaning towards releasing oil from the SPR to help battle rising oil and gas prices.
The problem with Democrats' thought process, is that the SPR should be used for emergency situations, not because oil prices are rising or because a presidential election is around the corner. Since 1985 the SPR has been tapped 18 times, including last July and August as the turmoil in the Middle East was heating up.
When Obama opened up the SPR last year it was after the price of oil was already 10 percent off the high earlier in the year. Within months, the price of oil shot right back to where it was before the action took place. Using the SPR for situations such as Hurricane Katrina in 2005 or during wars is prudent. Making the move now could prove costly – very costly.
Oil is only up 3 percent in 2012 as measured by the WTI Crude futures. Granted gas prices have risen much more, but the use of the SPR should be based on the price of oil. There are many other factors that go into gas prices.
Back to why tapping into the SPR could be so costly. With oil only up 3 percent this year, where is the case for the president to make the move other than political posturing? The president has his eyes on a short-term prize (the election) and is using that as a factor in making a long-term decision. The two do not jive and the end result is typically the wrong decision.
With the Iran threat looming and the possibility of the Strait of Hormuz shutting down for a period of time, President Obama needs to think of the big picture here. If the SPR is opened in the coming weeks and months and the Iranian situation escalates after such a move, it will leave the president dead in the water and the price of oil at record highs.
The only option left would be for the OPEC nations to attempt to make up for the shortfall due to an Iranian shutdown, and unfortunately it would not happen quickly enough nor would there be enough oil to calm the markets.
So, Mr. President, please put the best interest of the country in front of you political life for once. If not, your election chances and the American public will both be losers.