Using the US Strategic Petroleum reserves

An article in the Economist (March 24, 2012) discusses a plan to use the US Strategic Petroluem Reserves to dampen US oil prices. The reserve was set up to provide an inventory buffer against emergencies and has been used after Persian Gulf wars and Hurrican Katrina. But the mere announcment of a plan to use the reserve usually gets prices declining – however, they soon rise back up to their earlier levels. What is the best use of this safety stock to stablize oil prices ? How should natural supply-demand levels be separated from emergencies in the rational use of this reserve ? Is it reasonable to use the threat of release of stocks to influence oil price direction and manage its impact on the economy ?

About aviyer2010

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