The last time the US decided to embark on a major program to release oil from the Strategic Petroleum Reserve was in 2000, when President Bill Clinton, concerned about the price of oil going into the winter, opened up the spigots. The headlines from September 22, 2000 read “On the surface, the move looks defensible. Oil prices had soared to nearly $40 a barrel, up from $10 two years ago. America’s heating-oil stocks are indeed at perilously low levels. The first reactions overseas were favourable. European governments, just recovering from tumultuous protests over petrol prices, voiced their support. Even some members of the OPEC oil cartel, whose heads of state met this week in Caracas, murmured polite words.
Why would things be any different this time? Oil was $40. Are you kidding me? It’s now close to $95 over double the price now in 11 years. The DOW opened that day at 10,926.40 within 1.2% of where we are today. Oil has more than doubled in price but the Dow Jones Industrial Average is only better by 1.2%. The lesson learned from this? Buy more oil.