Apparently Dave and Obama have decided that the price of oil is too high. So guess what? They are going to push down the price of oil. I could have titled this one don’t fight the tape but I’ve already used that for one of Dave’s previous wheezes. What has got into Cameron’s head? Has Samantha bought him a Superman costume or something, first he goes around encouraging people who can’t afford a house to overstretch themselves for a mortgage, and now he’s going to Do Something about the price of oil
So how can we do that? We could:
- increase supply – nope, the IEA says we can’t do that much longer
- reduce demand. Now there’s an idea, but it sits badly with rising global middle class aspirations
Hey, I know what we can do, says Obama. Let’s fudge option 1 and release a load of the US strategic reserves. That way American drivers don’t get pissed off in the Driving Season.
Oh good, says Dave. Tell you what, we’ll help you by releasing some of the UK strategic reserves to help you out, along with out Squeezed Middle. Presumably some Civil Service flack hurriedly whispered in Dave’s ear that the UK doesn’t actually have any strategic oil reserves. Thinking on his feet, he changes it to asking UK oil companies to hold less in reserve.
Great. That’s all sorted then. What part of ‘strategic’ was it that you guys didn’t understand, or should we send in the DEA to find out what you were smoking?
The high oil price is a signal. That signal is telling you that more people want oil than production can currently match, and the price will rise to shed demand until it matches supply. It’s also perhaps showing that the currencies of both the US and the UK have been debased in recent years.
Oh and by the way, guys, you haven’t got enough strategic reserve to deal with the probable war on Iran. They may be mad as a bag of spanners over there but the interruption to production will probably exceed the 40 days capacity of the US Strategic reserve. Just look at what happened next door in Iraq a few years ago.
Simple Living In Somerset 
Hi Ermine, a good article but don’t let your blood pressure rise too much?
What you are seeing is Obama starting is election campaign with DC following behind. A bit like Sarkozy in his attack on Libya, again with DC following behind.
Trouble with Politicos, there only long-term ambition is a] get re-elected and b] a good job on a Board/Quango and/or seat in the Lords.
Releasing oil reserves, or telling the oil companies to reduce their reserves is a bit like selling off the family silver, [as per Mrs T & co] Unfortunately once you have sold it, a] it’s gone and b] most often its replacement cost is greater then its selling cost. Example Gordon’s sell off of GB’s Gold reserve. [I’ve had a pop at both parties to show that I am unbiased] but I believe there was more to the sell off that we don’t know about?
If you want to see a good rent try “The Slogger” on http://hat4uk.wordpress.com/
He goes on a bit but at least it is about the EU etc and the comments and links are good also.
Bye for now, but remember most of us are just witnesses to history, and don’t make it. Just enjoy the entertainment and try to limit its affect on you as much as possible.
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Oh, let’s give Obama a break on the oil talk. Of course the knows it will have no effect on the world oil price – the man has more brainpower than the entire staff of the IEA.
It’s just ugly election-year politics, which he hates just as much as we do. In reality, he wants higher oil prices to stick around and get us off of our lazy asses and start innovating. I feel the same way. But more than half of the US voters just want cheap gas, so he has to pretend he wants it too.
Releasing reserves in the spring season is also profitable. The government can just re-stock at the end of the holiday driving season, or whenever the next fall in prices occurs. I believe this useful trick has happened more than once in recent years.
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@MMM, looks like I’m showing a lack of understandng of US politics there! Thanks for the heads-up. Didn’t realise there’s an arbitrage possibility here, though I wonder if US drivers are on the other side 😉
@Lupulco, crikey, I don’t think I can manage to reach The Slogger’s heady heights! And of course, just when you think there’s no more family silver to flog off, along comes another wheeze…
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