Buy high, sell low. The definition of stupid.
That’s what Obama and Congress is considering as it eyes selling oil from the U.S. Strategic Petroleum Reserve (SPR) to pay for some of the recent increase of the debt ceiling and to pay for certain vote buying schemes in its latest spending plan.
The last time the U.S. bought oil for the SPR in 2000 through 2005, oil prices were rising (Figure 1 above). Now Congress wants to sell oil when prices are the lowest in a decade and continuing to fall.
Figure 1. U.S. Strategic Petroleum Reserve stocks and WTI crude oil price in October 2015 dollars per barrel.
Source: EIA, U.S. Bureau of Labor Statistics, Federal Reserve Board of St. Louis & Labyrinth Consulting Services, Inc.
Obama and members of Congress who routinely tell us that they know best need to look at the chart above and explain why we should believe them.
Selling oil from the Strategic Petroleum Reserve now is a terrible idea.