President Clinton's suspiciously timed release of up to 30 million barrels of Strategic Petroleum Reserve oil is at best a stop-gap solution to a lingering problem. Despite a national addiction to foreign oil, America still doesn't have a coherent energy policy -- and this Band-Aid doesn't come close.
The administration's plan to tap the 570 million-barrel reserve, through "swaps" that would let oil companies buy government oil now and replace it later when prices fall, will have a psychological effect on the market. But whatever the effect on prices -- already dropping a bit at news of this move -- supplies will remain tight and demand high.
Neither the oil from OPEC's previously announced production hikes or the newly released petroleum reserve oil will be available until at least November. American refineries -- already working at about 97 percent capacity -- will need more weeks to get heating oil and gasoline to suppliers. At most, only 3 million to 5 million of the 30 million barrels of reserve oil can be refined into heating oil, theoretically the main target of this move. Experts think the flow of oil may be too little, too late, in all but symbolic terms.
"Americans are going to have to learn to live with the high side of the swings in energy prices," said Anthony H. Cordesman of the Center for Strategic and International Studies, a Washington-based policy research institute.
Before any homes are heated by this oil, it will have fueled Vice President Gore's current presidential campaign, especially if the real target is short-term pandering to voters outraged by prices at the gas pumps. Despite administration claims that this is about people, not politics, it's worth noting that the release came just a day after Gore called for it -- and a year, to the day, from a previous Clinton administration claim that release of any part of the reserve would border on illegality.
This year's decision skirts that problem by broadly defining "national emergency" to include a threat to the continuing economic boom. Rising oil prices did precede earlier recessions, but the American economy is now less dependent on oil-fueled industry and the current boom has been fueled by high-tech enterprise. Other nations face far more serious economic problems from the oil crunch that started when OPEC restricted supplies in an effort to bolster prices that had sagged to a 12-year low.
Oil prices have remained high despite successful efforts to prod OPEC into increased production. "Global development means long periods in which supply barely keeps up with demand and prices of $30 a barrel or more are common," Cordesman notes. "There will be periods of low prices as well, but no one in the United States or our global economy can plan to live with low or moderate prices as the constant state of affairs."
Given the volatility of oil prices and America's higher-than-ever dependence on foreign oil, the solution likely lies more in reducing demand than in increasing supplies. Even 30 billion extra barrels won't last long in a nation that burns 17 billion to 19 billion a day. That's not worth giving oil-exporting nations more leverage or mortgaging national security, any more than George W. Bush's call for opening the Arctic National Wildlife Refuge to oil drilling -- which the U.S. Geological Survey estimates would yield only a six-month supply at profitable extraction levels -- is worth the risk to a still-pristine environment.
What's needed is a national energy policy that does more to promote conservation and energy efficiency, weaning America off its dependence on foreign oil. That should include ending an efficiency-standard loophole for gas-guzzling sport utility vehicles and increasing overall vehicle fuel-economy standards for the first time since 1995, increased federal support of alternate energy programs, a boost for winterization assistance subsidies and other measures that won't play nearly so well short-term at the polls.