There was a sudden drop in the price of oil on Thursday after President Obama moved 30 million gallons from the nation's oil reserves, a decision that will affect every American family concerned about gas prices. There was a growing concern in the administration about the overall economy and the recent supply disruptions in Libya, Saudi Arabia, and other areas of the Middle East.
The national strategic petroleum reserves were established to protect oil prices after the Arab oil boycott in 1973, when oil prices skyrocketed, and it holds more than 725 million barrels of crude in oil reserves along the Texas and Louisiana Gulf coasts. Only the president can authorize its use in a severe energy supply interruption.
Oil analyst Steven Kopitz, affiliated with the Association for the Study of Peak Oil, calls the president's decision an "economic hail-Mary pass" in this video. He further stated, "I think there was some skepticism these oil prices could actually bring down the economy. I think people are beginning to think that, in fact, they can."
Other pundits are debating whether this release is necessary at this time. Karen Harbert of the U.S. Chamber of Commerce stated in the video above, "This is not a severe supply disruption, so I really don't believe that this meets its original mandate of what we should use the SPR for." Jay Hancock, financial columnist for The Baltimore Sun, thinks that this decision could backfire, but energy experts believe this is an important symbolic move.
The president did not make this rare move alone. It was a coordinated effort with 29 other countries that also moved 30 million barrels of oil, bringing the total to 60 million barrels. Until today, this only happened twice: once during the first Gulf War in 1991 and then after Hurricane Katrina in 2005.
Whether good business or good politics, there is no dispute that today's decision to tap into the nation's oil reserves will discourage oil industry speculators, because gas prices, which have already fallen about 30 cents per gallon in the last month, will continue to go down.
Â©2011 Melanie Byas (on LinkedIn) for Gather News.