Oil spill

According to the American Automobile Association (AAA), some 48 million American drivers will hit the highway over the next few days for Thanksgiving weekend. They'll be filling up the tank at the highest prices in seven years, averaging close to $3.50/gallon nationwide but considerably higher than that in some states, such as California. The real economy is doing just fine -- check out the remarkable jobless claims data released today -- but the rising cost of gasoline (and just about everything else) is top of mind for voters, and largely accounts for President Biden's plummeting approval ratings. 

So it's no surprise that the President wants to provide some relief at the pumps. There have been rumours going around for a while about a possible release of supplies from the Strategic Petroleum Reserve, and this has now come to pass. Over the next while, the US will release 50 million barrels of crude from the reserve, and has secured agreement from other countries, including China, the UK, Japan, and South Korea, to do the same thing, albeit on a much smaller scale.

To which one can only say: seriously, folks? Global oil production is somewhere in the area of 90-100 million barrels per day. (It peaked at 95 million in 2019, fell sharply in 2020 but is now presumably rising again as the global economy bounces back}.  It seems pretty far-fetched to imagine that releasing the equivalent of less than one day's production will stem the upward pressure on prices, let alone reverse it. 

Indeed, as numerous commentators have already pointed out, it could even have a perverse effect. OPEC (and OPEC+, which includes Russia) is understandably ecstatic at the way prices have moved this year. There is every possibility that these countries will react to Biden's move by limiting their own production, in order to keep prices where the are, or even boost them further. 

It's no real surprise that Biden feels the need to "do something" when this issue is so important to voters, and the mid-term election campaigns are about to ramp up. But empty gestures can be dangerous, and this gesture is about as empty as it gets.