Obama considers releasing oil reserves
Despite talks with Cameron during Washington trip, the price of crude has since risen.
During his US visit this week, David Cameron discussed with Barack Obama the possibility of releasing oil from strategic petroleum reserves. The Prime Minister said it was "worth looking at because it is having an effect on all our economies, on all our families, on our budgets."
Despite no conclusive decision being reached, the talks demonstrate the extent of the President's concern at the costs of fuel.
Of the White House talks, Cameron said:
Obviously, petrol prices are having a big effect on families, there's no doubt about it. It does have a big effect on consumer confidence, it affects household budgets. We would both like to see global oil prices lower than they are today. We didn't make any decision about the release of global oil reserve stocks. We did this last year when there was supply disruption because of the disruption in Libyan production.
The Prime Minister also referred to last year when the UK released oil in an effort to dampen prices following the supply disruption caused by the unrest in Libya.
Some scepticism has been shown at the motivation behind a freeing of reserves: the energy expert and former chairman of Dune Energy, Alan Gaines, told NASDAQ:
I personally do not believe that sovereign nations should play pretend crude oil traders. The Strategic Petroleum Reserve should be utilized only for national emergencies.
Mr. Obama is using the SPR for his own political gain, attempting to jawbone lower crude prices, and therefore gasoline costs, to the consumer. All this will serve to do is to temporarily lower the market, primarily for hungry Asian buyers such as China.
Over at the Washington Post, Charles Krauthammer wrote today:
High gasoline prices are a major political problem for Obama. They are not just a pain at the pump, however. They are a constant reminder of three years of a rigid, fatuous, fantasy-driven energy policy that has rendered us scandalously dependent and excessively vulnerable.
Following reports of Cameron's announcement yesterday, the price of Brent crude dropped; however, it has since risen this morning by 75 cents, to $123.35 (£78.5) per barrel.