March 11, 2011

Obama's speech today is not a coincidence

President Obama is expected address the nation today to address the Middle East, oil and probably try to allay fears about the impacts on gas prices and the anemic economic recovery.  It's not a coincidence that it is timed to the Saudi Arabia 'Day of Rage' protests expected today.  I have to admit that the President is trying to get out in front of something for a change instead of voting Not Present on the Middle East for quite some time (since Iran's attempt at a Green Revolution).  What concerns me now is not the fact that he's finally paying serious attention to important events, but rather what his responses might be. This might be for national security an out-of-the-frying-pan-and-into-the-fire moment.

What is the President likely to discuss today? It might vary, depending on the timing of his speech in relation to how events are proceeding in Saudi Arabia. If things turn ugly, expect the President to attempt to be both more soothing in his tone but more aggressive in the steps he’s going to take. However, I think it’s pretty safe to assume that either way, he will hit on two major points. He will re-iterate the need for the country to reduce its dependence on foreign oil through the use of green technology – windmills, solar power etc. That’s agenda driven. It won’t do anything to help in the short run and until there’s some fantastic breakthrough in green technology, there is absolutely no way to determine whether the long run is ten years or fifty years.

More importantly is his other probable talking point: releasing the nation’s strategic petroleum reserve in order to help American’s through the recession with less of an impact on the price of gas at the pumps. There’s the political approach to go ahead and do it in order to prove your empathy and compassion with the non-arugula-buying common man and there’s the strategic national interest approach which would be not to tap into it and keep it for its intended purpose – national security.

The strategic oil reserve is near its 727 million barrel capacity. At capacity, with a domestic consumption of 20 million barrels per day, assuming 20% of domestic usage would need to be supported by releasing the reserve, that means the reserve would be used at a rate of 4 million barrels per day and the reserve could last at most 181 days. That’s six months worth of supply. That’s a very limited window of lower gas prices, given that no one really knows how long Middle East instability might carry on. This could devolve into years of civil unrest and war. A temporary easing would certainly prove beneficial to the President politically – holding down gas prices and perhaps even offsetting the deficit numbers by artificially injecting the one time set of sales receipts into the national coffers. At $105 per barrel, that’s roughly $75 billion in revenue. But at what cost?

Without a strategic oil reserve, the United States is vulnerable to hostile intent from the likes of China or even Iranian incursions into Iraq knowing the U.S. doesn’t have the logistical ability to respond without sufficient oil. Or even if the U.S. could respond to some sort of regional threat, everyone would know that the extent and duration of a U.S. response is limited. Like it or not, the U.S. is still the first responder in this sort of situation (unless President Obama really has ceded that mantle to France).

Most likely absent from his talking points will be the offshore drilling permits his administration is deliberately holding up and battling in the courts, and the idea of producing more domestically – drill here, drill now. With so much oil coming from Canada and Mexico, it is simply logical to augment that with the oil that is right underneath American soil. Nevertheless, that is not the president’s focus. His focus is clearly on re-election and foreign policy and strategic interests be damned. He can argue that it has been tapped plenty of times in its history but President Bush was steadfast in his refusal to do so because he was aware of the current state of international affairs. Comparing the release of the reserve now to those in the past is an apples to oranges comparison.

Is it better that the President is out in front of this Saudi situation? Seemingly not. It seems obvious to me that what he is really out in front of his own re-election bid. I hope that I’m wrong and the strategic oil reserve is not on Obama’s radar for this speech. If it is, it really is about his re-election and not national security. We shall see.


  1. Brilliant post! As the President pretty much hasn't bothered to address this seriously in the last month, whatever he says or does is to little to late. combine that with the fact that he hasn't got one ounce of respect around the world anymore and one can only see a recipie for disaster.

    Tapping the res3erves will do nothing to help the current situation. Besides, even with that, how can one even remotely believe anything about this coming from a man who campaigned on the fact he felt we should be paying higher prices. After all, in the words of his lackeys, the economy is well situated to absorb the higher prices. That is the policy pf this administration. consumer be damned!

  2. You flatter me Joe.

    You also bring up a good point. I meant to link some of the points I made back to other posts I'd written, but I completely forgot about the "under my plan, prices will necessarily skyrocket" comment Obama when talking about the coal industry. His credibility is most certainly suspect and that should be mentioned as well. Thanks for the catch on that.


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