Thursday, June 23, 2011

Notes on Oil Prices speech

So I began work on this speech on Saturday, finished it today, and lo and behold, what do I find when I turn on the news? That Secretary Chu has announced a 30 million barrel release from the reserves! I'm glad he did it, but really, he couldn't have waited a day?

I'm not incredibly surprised, because it makes a tremendous amount of sense. With Republicans saying no to everything in the House of Representatives, releasing oil from the SPR is one of the few things Obama can do to try to improve this economy. The price of oil is really slowing growth, and the simple act of the government introducing even a small amount should be able to deflate some of the speculation, and send a signal to the markets that this is something they're willing to do. We're seeing the effects already. Oil futures were down $5 a barrel after today's announcement.

Here's the difference between what happened today, and what I had happen in this speech: 1) The release of oil reserves was followed up with a call for reforming commodities trading, and 2) There was a promise (albeit, purposefully vague) that if nothing changes, there will be another release. Both are important so that this isn't just a temporary fix. When a doctor sees a patient with high cholesterol, he gives him medicine, and then insists that the patient follows it up with better diet and exercise. It's the diet and exercise that can actually make improvements for the long term, but it's not as easy. Hopefully in the coming days, we will see more of a longer prescription from the President.

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