The Strategic Petroleum Reserve: What Kind of Strategy is Buying High and Selling Low?

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Pumping into the Strategic Oil Reserve at a Time of Record High Oil Prices?

It's just plain dumb. Why is the U.S. government, at George W. Bush's command, (Bush: news - web sites) purchasing oil and pumping back into the strategic oil reserves? (For background, see HowStuffWorks: Strategic Petroluem Reserve or the official website: Strategic Petroleum Reserve )

I don't agree with John Kerry's ( news - web sites) assertion (see the article on USA Today) that ceasing to purchase and pump this oil back into the reserve would reduce the pump price of gasoline right now - as I understand it, that is primarily due to limitations in refining capacity in the U.S. (there hasn't been a new refinery built in the U.S. since 1948), and the amount being purchased is too small to affect the overall market. The value of the reserve is largely symbolic: by releasing (selling) oil during an artificial reduction by OPEC, we signal the markets that the U.S. is willing to intervene to keep the price and flow of oil stable. In fact, Kerry's argument looks like pure politics: see this analysis from the National Center for Policy Analysis from 1996 of an almost identical situation during Clinton's presidency;

I disagree for a different reason: it is idiotic from an economic perspective. Who buys high and sells low? That's moronic! If our government is going to use the oil reserve to attempt to affect the oil supply, prices, or foreign government's policies, then shouldn't we be SELLING when the oil prices are high, and BUYING when they are low?

And how much revenue would that generate for the government. A side benefit to a more stable and perhaps lower price of oil and gasoline might also be greater revenue for the government and a need for less taxation of you and me!

Unbelievable, isn't it, how dumb our government can be?!

Fuel economy ratings and greenhouse gas creation of U.S. model cars and SUV's.