The Silly Season has begun. In England this season involves regattas and tennis and Pimm's at garden parties and everyone in the City is either a little bit hungover or on holiday. The papers are full of silly headlines involving the Queen or Fergie or shenanigans at Wimbledon. Here in America the Silly Season begins with dozens of little known Republican politicians declaring their candidacy for President. They shout and whinge about the economy, about jobs and about how terrible it is for the average American to pay $4.00 a gallon for gasoline while they walkie-talkie their limo drivers to wait out front.
Americans like cheap gasoline. They believe it is their God-given right to have cheap gasoline. They drive to the local corner market when they could walk, and they leave their engines running (even when the temperature outside is a tepid 70F as it was here last week). They buy pickup trucks and never use the back of them to carry anything but the family dog, while getting 15 miles to the gallon. They drive ATVs around and around my house in Maine, making me rethink my gun-control stance. They drive from NYC to northern Maine - an 8 hour drive - for a long weekend (they are renting said house).
The confluence of these two things - silly politicians and average Americans whinging about gasoline prices - led to the silliest of silly things yesterday. President Obama announced he had authorized the release of oil reserves from our SPR and from the IEA's stocks. We are to receive the 'gift' of 30 million barrels of US crude from the SPR and 30 million from the IEA. Oil prices puked, despite much head-scratching. US consumption is close to 20 million barrels per day, so that's a day and a half's worth from the SPR. The IEA link is more surprising, but it could be that it to try and hammer down the unnaturally high Brent/WTI spread.
I heard that the news of the SPR/IEA release leaked out (probably in Europe, the IEA has to notify the producing/holding nations before tapping its reserves). Some oddly anomalous spread trading was noticed about a week before the announcement. There's one for you Commissioner O'Malia....