President Obama has recently released a statement assuring that current global petroleum supplies are capable of supplementing any loss incurred due to sanctions against Iran, therefore encouraging consumer nations to significantly reduce the importation of Iranian petroleum and find other suppliers(read here Saudi Arabia). This may offer some long term ease of oil prices, but what of the immediate impact? Global supplies do not necessarily guarantee affordable gasoline at the pump. A more direct action will need to be applied to ensure lower prices and tapping the Strategic Petroleum Reserve will likely be that action.
The White House is certain that sanctions will bring Iran to the negotiating table and Israel believes that threats of military action will frighten the rest of the globe into taking more demonstrative steps against Tehran. Unfortunately, both governments have, so far, been proven mistaken. The unintentional result of these policies has in fact created a petroleum speculator's dream. Despite the ample amount of oil on world markets, and sufficient refining capacity, the spectre of fear continues to manipulate the price of petroleum on commodities markets. At the close of this year's 1st quarter, the WTI benchmark is floating comfortably at approximately $103 per barrel on the NYMEX. While not the the exorbitant prices of the summer of 2008, it is conceivable that given the current trajectory that such prices could be approached by the summer of 2012.
In an election year, one need not be an ardent student of politics to understand that prices of $145 to $150 per barrel will irrevocably harm the President's campaign and disrupt what appears to be a strong resurgence in the American economy. American consumers are feeling the pain of high gasoline prices, and will surely express their discontent at the polls if actions are not taken to alleviate this pressure. The Strategic Petroleum Reserve will and must be utilized in order to mitigate rising domestic prices. The United States is not alone in this realization, as other Western nations which rely directly on Iranian petroleum imports, must also prepare to tap their reserves in order to stabilize domestic markets and ameliorate the damage of high oil prices in what is an apparent economic recovery.
Whether the sanctions against Iran are ultimately effective or not is somewhat irrelevant in this matter, what is of vital concern in the realities of politics and economics is that prices come under control. This statement may be somewhat crass, but in an election year, the importance of foreign policy will almost always lose something of its luster. In the days of the Pax Romana, panem et circeses kept the masses pleased. As this current period is percieved by some as the Pax Americana, let us add oleo et interrete to that ancient advice.
President Obama, keep the people happy. Tehran will still be there after November.