President Barack Obama reportedly sent a secret diplomatic mission to obtain Saudi Arabia’s OK prior to the U.S. release of 30 million barrels of oil from its Strategic Petroleum Reserve.
Historically, Saudi Arabia has objected to any effort by the United States to manipulate the global price of oil via its Strategic Petroleum Reserve (SPR). After all, angering the Saudis could spur them to demonstrate who really controls world oil markets -- them.
That Obama has an interest in how much oil the Saudi’s produce is nothing new. In April, Obama told a Detroit TV station: “We are in a lot of conversations with the major oil producers like Sandi Arabia to let them know that it’s not going to be good for them if our economy is hobbled because of high oil prices.”
Apparently, that presidential lobbying effort worked. At the OPEC meeting in June, the Saudis announced they would increase their oil production by 1.5 million barrels a day.
But with rising gas prices and a faltering economy, the Wall Street Journal reports that Obama began a diplomatic campaign to explain his plans to crack open the SPR to the Saudis.
The reserve originally was created to keep America running during an emergency disruption of supplies of the type that caused massive lines at gas pumps during the 1973 Arab Oil embargo.
In May, the administration’s campaign to mollify the Saudis began in earnest, and reportedly included a personal telephone call from Obama to Abdullah. Later that month, the president discussed the oil issue with world leaders at the G-8 summit in France.
Then in June, the International Energy Agency announced it would release 60 million barrels of oil, half of which would come from the U.S. strategic reserve.
Thirty million barrels of oil is about 4 percent of the 727 million barrels currently being stored in subterranean salt domes in Texas and Louisiana.
Rep. Fred Upton, chairman of the House Energy and Commerce Committee, told Newsmax in an exclusive interview last week that releasing oil from the Strategic Petroleum Reserve in order to drive down prices was “a bad idea,” and sends the wrong message.
“We need a policy that begins to send a message to the speculators on Wall Street that we’re going to be serious about domestic production,” Upton told Newsmax.
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