Strategic Petroleum Reserve
Apparently the Bush Administration is debating opening the spigots of the Strategic Petroleum Reserve in response to "market disruptions caused by Hurricane Ivan" (this is pre~Jeanne news).
Unlike Bush~the~Father, this Bush administratoin went into the petro spot markets and began buying to bring strategic reserves to capacity during the early period of the Iraq war, with the resulting price pass~through that has contributed to driving up prices.
During the final ramp~up period in the previous Gulf war, that Bush Administration opened the Strategic Reserve spigots to act as a moderator of prices, warding off spot market speculation and the price spike that would cause. This Bush Adminsitration thought it wiser to do the reverse.
I have no idea what the right thing to do is in such a complex situation, where both national security and economic interests are bound together so tightly, as this is a bit beyond Macroeconomics 101.
Of course, news of the Strategic Reserve being opened now would tend to have some immediate impact on prices, which would drive votes to Bush as our fellow voters are so sensitive to this issue.
Price spikes are generally follwed by quick sell~offs as people do a bit of profit~taking. This would tend to reduce the price to pre~spike levels as happens in other markets. A bit of curve~smoothing. Reversion to the mean, for any math nerds like me out there.
Now, before you jump all over me, notice I haven't offered a personal political opinion. I'm just repeating stuff that has appeared in those radical liberal leftie rags, the Wall Street Journal and Forbes.
As a little PS, I am new to this forum and have been reading my way through a number of threads. I'm impressed with the quality of a lot of the posts, and am glad I've found and joined you.
