Obama's dumb oil move

Tapping the Strategic Petroleum Reserve?

First, the amount it contains? 727 million barrels, per Wikipedia, is enough that it can't be tapped too often, too hard.

Wiki also says the current consumption per day is 21 million barrels so Obama's 30 million barrels actually lasts less than a day and a half (just over 1 day, 10 hours to specific), per fried Leo Lincourt.

So, add up A and B, and contra Salon's Andrew Leonard, it's possible this will NOT stop oil speculation. (I'm also assuming Saudi Arabia's talk about raising production is a lot of talk and not much else, given its recent unmothballing of a field that that had been in drydock for years.) The market remains relatively tight. It might take the sharpest edges off speculation, but that's about it. And, due to the realities of what the strategic reserve contains, commodities speculators know that.

Beyond that, Obama's never showed any real inclination to reign in speculators. If he had, he would have tighten commodity, commodity futures, and commodity derivatives legislation.

But, since many of those folks are the ones who were major bankrollers of the mythical Citizen Obama's 2008 presidential campaign, and whom he hopes will be the same in 2012, he's not going to regulate them in the future.

This was just about trying to give the economy enough of a nudge, without having to make any actually liberal political decisions, to boost his election chances.

But, this is about more than Obama. The International Energy Agency signed off on this too.

This is also in part about post-Fukushima Japan, worried about summer energy needs with some of its nuclear plants offline. Or so I'm guessing. It's about the EU, hoping this will take the mind off of bailout trauma in Greece and bailout payment trauma in Germany. And, it's about China hoping it can continue to keep its housing and other bubbles from bursting.

Well, I don't know what the answer is for Japan. For Greece, austerity won't address a culture of tax evasion and corruption that makes the legal-on-paper antics of folks like the Koch Bros. look like kindergarten, and cheap oil won't camouflage austerity. For China, as Paul Krugman wrote the other day, only an upward re-evaluation of the renmimbi (yuan) has a serious chance of deflating those bubbles without too much pain or destruction.

On Europe, as I learn more ... it's supposed to replace the missing Libyan oil, most of which went to Europe. So, I wasn't totally wrong there.

China? At least one market analyst in that area, as well as some in the U.S., suspect "coordination" with Fed chief Ben Bernanke's speech about a slowing economy, and that this will be the gateway for more "quantitative easing," but by different name and means. In fact, Forbes calls it QE2.5

Meanwhile, the Commodity Futures Trading Commission is investigating "suspicious" trades in oil just before the decision was announced. Getting back to lack of regulation - such insider trading isn't illegal in the commodities markets.

And, back to the "timing" issue, too. The story notes the Saudis had already announced a production increase.

So, many this was a bank shot against the non-Saudi members of OPEC, played in conjunction with Riyadh?