Strategic Petroleum Reserve to the Rescue?

Jim Hamilton:

Strategic Petroleum Reserve to the rescue, econbrowser: The United States and Britain have apparently been discussing a joint release of strategic petroleum stockpiles. ...

In fact we ran that exact experiment last year... Specifically, the IEA announced on June 23, 2011 that the OECD countries would release 60 million barrels from their joint stockpiles, half of which came from the U.S. Strategic Petroleum Reserve. There was an initial modest drop in the price of oil on the day of the announcement, though within two weeks the price was back up above where it had been before the announcement.

The price of oil did decline later in the summer, though surely this should be attributed to deteriorating news from Europe rather than the SPR release. For example, last summer's drop in WTI was mirrored by a drop in other financial indicators such as the S&P500. ...

I see no evidence that last year's SPR release accomplished anything, and would not expect the outcome of another release this year to be very different.

A far more sensible proposal would be to build the pipelines necessary to allow the oil currently in private stockpiles in the central U.S. to flow to refiners on the Gulf of Mexico. ...