Yes­ter­day, Sen­a­tor Obama announced (in a star­tling change of posi­tion) that the US should tap the Strate­gic Petro­leum Reserve to coun­ter­act high gaso­line prices. Unfor­tu­nately Obama’s new solu­tion is counterproductive—perhaps even naive—for a cou­ple of reasons.

The SPR, cre­ated in the wake of the 1973 oil embargo, is intended to counter short-term dis­rup­tions to the sup­ply of oil, not long-term dis­rup­tions to mar­ket price. When the Mid­dle East essen­tially shut off the flow of oil in the sev­en­ties to pun­ish us for sup­port­ing Israel, it became clear that there are strong eco­nomic and national secu­rity argu­ments for stock­pil­ing oil. But a short­age is not the sit­u­a­tion we face today. The oil is flow­ing, but prices are high. Demand remains high. The mar­ket is work­ing! Draw­downs of the SPR, a stock­pile of finite size, will not have a last­ing effect on the mar­ket situation.

Also, the Strate­gic Petro­leum Reserve is not a giant under­ground gas tank. It con­tains crude oil. To have a use­ful impact on con­sumers, the oil must be extracted and sold to refiners—presumably at below-market-rate prices. In the US, about 17% of gaso­line prices account for refin­ing and profit (2007 DOE fig­ures). When oil is drawn from the reserve, what mech­a­nisms exist to pre­vent refin­ers (who are already enjoy­ing record-breaking rev­enues) from turn­ing the cheap oil into yet more profits?

Many coun­tries, like China, sim­ply sub­si­dize fuel prices to keep them attrac­tively low to cit­i­zens. I won­der if sub­si­dies might be cheaper, more effec­tive, and eas­ier to reg­u­late than actual oil.

One might ques­tion whether we have a prob­lem any­way. Yes, gas prices are higher than ever, and that’s an unpop­u­lar sit­u­a­tion. We know that prices are hav­ing an impact on tourism and ship­ping. Heat­ing costs threaten the poor and loom omi­nously over the mid­dle class—and we need to do some­thing about that. But in a way, it’s refresh­ing to see how, after enjoy­ing decades of ridicu­lously low fuel prices, indi­vid­u­als and busi­nesses finally have an incen­tive to cut back on waste and inef­fi­ciency. There are indi­ca­tions that cen­tral­ized hub-and-spoke dis­tri­b­u­tion and rail ship­ping are mak­ing come­backs. More peo­ple are using mass tran­sit. Home­own­ers who have been accus­tomed to cheap heat are installing proper insu­la­tion and effi­cient fur­naces. Dri­ving small cars has finally become fash­ion­able. Assum­ing we can address the short-term human costs, how can this stuff be bad?