The Clinton Administration’s threat to take oil out of the Strategic Petroleum Reserve if it cannot force OPEC to increase the supply is nothing more than the administration’s pandering to subsidize voters on the heavily populated East and West Coasts. Consider the following:
The price of crude oil has little to do with the price of heating oil.
The abundance of heating oil is controlled by the refineries. They simply got caught short by the recent cold spell in New England while cutting back on heating oil and gearing up to produce more gasoline for summer driving.
OPEC currently supplies more than 50 percent of the U.S. market for crude oil.
They had an internal price war last year and dropped the price to $10 per barrel, which in the U.S. translates to Depression-era prices for crude, and gasoline accordingly sold for 90 cents to $1 per gallon. Consumers may indeed love it, but the domestic energy industry was decimated in the process.
For those who demand Depression-type prices for crude oil, they should also demand Depression prices for everything else they buy–and for their paychecks. Adjusted for inflation, today’s price of $28 to $30 per barrel is about where it belongs.
For those who want less expensive gasoline, keep in mind that state and federal taxes represent up to one-third of the price of a gallon of gasoline. You want $1 per gallon gasoline? Repeal these taxes.
