Oil and the Strategic Oil Reserve: Stupidity Piled on Stupidity

You remember the Strategic Oil Reserve? Do you remember when we stopped buying oil for that reserve? Right. It was about when oil went to the very top: $140.00 a barrel. In a "no brainer" stupidity that really turned my brother totally against President Bush, even though it was not a major factor in the price of oil, President Bush insisted on purchasing oil for the reserve to almost the bitter end, as oil was in that rising price "bubble" that has now burst. President Bush had to be dragged, screaming, to sign a Congressional Bill (passed with a veto proof margin) terminating the purchase program as of July--just when the oil price "bubble" was about to burst. Now we are not purchasing oil at under $40.00 a barrel for the Reserve.

yes, the Federal Government has adopted that immortal economic principle: "Buy high and sell low." You could argue for a thousand years and not justify this stupidity . In fact, the tunnel vision stupidity of President Bush is continuing to advocate HARDING oil as the price went above $140.00 a barrel was one of the worst single stupidities of any American President. It is hard to imagine one human being being that "no brainer" stupid, at a time when one reason that oil prices were rising so high was irrational buying/hoarding by China, India and speculators. We could hardly object much when we were doing to same thing, in one of the most truly irrational policies that any President has ever advocated. And he kept advocating it, no matter how high the price of oil went. Yet, as far as I know, he has not advocated resuming purchases, at a time when we should be purchasing all of the oil for the Reserve that we think we will ever need (my brother, the trucker, even recognizes this truth).

And you wonder why central planning is a disaster. The only rational policy was to buy oil for the Reserve ONLY if it were below a certain price, and to resume buying once it fell below that price. Then, if the price rises again, as it will, you could consider selling some of the low price purchases, as well as suspending the new purchases.

I never favored using the Strategic Oil Reserve to try to manipulate the price of oil, although I would have reversed the "no brainer" stupid purchases we made as oil was rising. However, I regard trying to use the Reserve to fix the price of oil, or manipulate it in a major way, as a major mistake. My brother, the trucker, was willing to advocate selling oil out of the Reserve to lower prices, although I think he recognized that you could not use the Reserve to try to obtain the oil price you want in such a major way as to compromise the purpose of the Reserve.

This does not change that it was a "no brainer" to stop buying oil in the speculative/hoarding price "bubble". There are some things that are just beyond stupid. This was one of them, and the stupidity is being repeated by failing to resume purchasing oil for the Reserve now that it is "cheap".

The only reason that President Bush's advocacy of purchasing more oil for the Reserve, no matter what the price (in the middle of an outrageous oil price "bubble") will not be regarded as one of the major blunders ever made by any American President is that the amount of oil involved was just not enough to have a major influence on the "market" price (albeit the psychology was all wrong, and the psychology of suspending purchases might have had influence on the oil market).

Still, even though it is a policy that cannot be said to have a major impact on the recent spike/bubble in the price of oil, President Bush's "policy" (too kind a word) on purchases for the Strategic Oil Reserve shows why my brother regards him as a stupid man. It was, as stated above, one of the stupidest, most hard headed absurdities in the history of Presidential absurdities--compounded by not even suggesting that maybe purchases should now be resumed.

See Sunday's entry as to my brother's opinion of President Bush as the worst President we have had in a hundred years (which means worse than Herbert Hoover, as well as Jimmy Carter). As I state in that blog entry, I have never gone that far, but believe that the stupidities of President Bush have about killed the Republican Party. On a small scale, Strategic Oil Reserve stupidity illustrates the kind of thinking that got President Bush in trouble on a larger scale.