Rob Sobhani on the SPR Release
To give us some more perspective on the decision to release oil from the Strategic Petroleum Reserve and what that could mean, I sat down with Rob Sobhani, president of Caspian Energy Consulting.
The reserve is being released now, when gas prices were higher in the spring, and the conflict in Libya blew up months ago. Why now?
[SOBHANI] I believe it has most to do with domestic situation. I believe both the United States and oil-importing countries of the West feel that consumers may start feeling the pinch. We're getting into the summer months. It's the driving season. And so I believe, for the most part, we're looking at a domestic reason -- to help American consumers.
[ASSURAS] Well, then that leads to the question, what will happen to gasoline prices? Will we, in fact, see prices drop even more in the short term?
[SOBHANI] We already have seen prices drop, but I believe that, over the long run -- not the short run -- we are not going to see prices come down measurably, because taking reserves out of the Strategic Petroleum Reserves is not going to solve our oil dependence problem.
[ASSURAS] In this case, the amount of oil being released, at least in the United States -- from the United States -- is 30 million barrels. During Hurricane Katrina in 2005 or after, it was 11 million. Early '90s, in Desert Storm, it was 21 million. More now, 30 million. Is this more about the global economy than gasoline prices?
[SOBHANI] I believe it's a combination of both. What happens overseas affects us here at home. And we need to start thinking about how this link really happens and what we can do to effect foreign policy so that it doesn't hurt us domestically when it comes to the price of gasoline.
[ASSURAS] Well, what would you recommend, then? How do you deal with the gasoline prices' being so high in this global world? Gasoline is -- the price is set on the world market, but with conflicts and so much integration around the world, what do you mean, how do you solve it?
[SOBHANI] If you chart a graph from 1974 to the present day, you will find that the price of oil spikes on political events. So this tells us one thing -- we need to work on political solutions to the problems that we face, because it affects us. We need to start looking at the Middle East, for example, in a different light. How do we bring long-term stability to the Middle East, so that we can have $2 a barrel, not $3, not $4? And that's possible.
[ASSURAS] The administration says that it is going to reevaluate the release at the end of the 30 days of the release. If things haven't changed -- Middle East still in turmoil, if gas prices haven't gone down -- and you don't think they're going to, anyway -- do you expect we're going to be seeing more releases in the future?
[SOBHANI] You know, the release is akin to giving a one-shot radiation dose to a cancer patient. It's not going to kill the cancer. It's going to stay there. Our addiction to petroleum is going to stay there unless and until we find a creative way, with leadership, to address some of those fundamental stability issues in the Middle East, because that's where 67% of the oil of the world is located. There is no doubt that the president of the United States feels that it's important to make those releases, and I think we will see, if the price doesn't go down, because American consumers are being hurt.
What's behind the timing of President Obama's release of oil from the Strategic Petroleum Reserve? Anchor Thalia Assuras talks with Rob Sobhani, president of Caspian Energy Consulting, to ask why policymakers released oil from the SPR now, instead of when prices were higher, and if Middle East turmoil is enough to justify it.
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