I have several times posted that we need to release some of the oil in the Strategic Petroleum Reserve in order to punch a hole in the bubble that emerged in oil prices. Now is the time to do it.
Oil has come down on demand destruction and came close to the support level of $110. In order for our economy to continue to prosper we need to go through that level to maybe $100 or even $85. That would be a great boost to our economy and do more than any tax cut would do. Again the government could sell some of the over 700 million barrels at the current price and buy some back at a lower price. Get that-- a break for all drivers and the government increases revenue, duh!
What needs to happen? President Bush needs to declare the continued production of Gulf Oil of strategic importance to the US and commit to releasing oil from the SPR to compensate for any lost production due to Gustav. Currently the Gulf produces about 25% of US Oil. That would do it. The oil bubble that has been easing would finally collapse when it was known that Gulf storms would not impede production.
Also have you seen the map of the oil platforms in the Gulf. It is insane to have them all clustered off the coast of Texas, Louisiana and Mississippi. If it is one thing I understand that is diversification. We need to be drilling now off Florida and the east coast to not only increase our domestic production but not have us go nuts every time a storm brews in the Gulf.
Update: Someone in the Dept. of Energy must be reading my blog because they issued a statement of the willingness to open up the SPR and the price of oil dropped $4 from the highs of the day. Good move, keep it up!