You're watching...
Austan Goolsbee sounds off on why we shouldn't release oil from the Strategic Petroleum Reserve solely because high gas prices
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
President Obama cracking down on energy speculators the president says speculators are making millions while the rest of us -- -- soaring gas prices.
President Obama today announcing a plan that would increase the federal supervision of oil markets an increase penalties from manipulation.
But -- his plan actually lower the price you are -- at the pump.
Austan Goolsbee is the former chairman of president Obama's council of economic advisors he says there is another way to control oil and gas costs he -- this good -- there.
I -- great to -- again.
Nice to see -- besides -- obvious.
Supply and demand -- -- other issues right now that are causing gas prices -- -- like Middle East.
Problems or even the oil speculation -- -- -- why you think the gas prices are high.
Well I think for sure those fears in in the geopolitical.
Arena.
About the Middle East have been pushing prices up you saw this when -- Arab Spring broke out prices went way up.
And sold the political and certainly I think some big component.
I don't know the answer to how important speculators are I think most economists we -- we have a hard time looking around and figuring that out we're not we're not oil traders are -- thing.
It seemed to me when I saw what the president was announcing it was largely giving this the FTC the regulators.
That it would call for them to have additional authorities and -- got to the technology to to police that.
I don't know the answer to how important that this.
Whether this fashion that an if is that trying to figure out what's the best solution is some trying to identify you know exactly what is -- despite an obviously if it's -- geopolitical issue that's a hard thing to control for speculation -- something that's.
You know I have in energy markets -- makes it much easier.
And so I guess that I turn to your op Ed we're used to worry in your op Ed piece in the Wall Street Journal recently -- said that at least -- from -- they thought we should tap the strategic petroleum reserve instead as a mechanism to lower the prices.
Well I did you -- right but not as a mechanism to lower the prices but because.
I think that if you measure the strategic petroleum reserve.
As a strategic.
Therefore its strategic value would suggest that we've.
Put too much in there that the amount of oil we want to keep in the strategic petroleum reserve.
Ought to be tied to how much importance we get.
We always had about 75 days worth of non North American imports in there we've now had domestic production go way up.
And our imports are way down and yet we're increasing the amount of their I think it doesn't doesn't actually make sense we -- tried.
Said I'd I'd name the rule after my mom Melinda roll let's try to set the number of days.
That we keep in there to be a constant that's a way to do it and if you did that.
You be releasing a fair bit of oil in the near term.
I didn't actually people should try Google and get this -- more about the limit rule because the origin of the Linda rule is actually quite interstate.
But does say that for the of people out of that Google -- I am if -- if we do you tap the strategic -- Have if we have we'd do that if we do that route then we -- it will have a little more oil in the domestic market for a period of time but it certainly is not the it's not the end -- it's not gonna lower prices long term we still the problem of the geo political and that's -- more serious.
The impact on the price right.
Yeah I think that's true look there's strategic petroleum reserve is -- is not intended to be any for kind of a permanent solution.
I think that geopolitical stuff you got us that's got to either sort itself out -- we've got to sort that out.
We sought to the Arab Spring.
That some of those fears go up and then if the worst doesn't happen they they come back down.
And then.
If you're looking at the speculators as I say I don't know you gotta have people that are more expert on these oil trading markets.
To look at that to figure out how much of that it is driving prices.
To the extent that it is driving prices I would only add.
That if you just outlined a policy to release the strategic petroleum reserve in a -- of -- moderate amount over a set period of time.
That would really white if you thought there were speculators that would basically wipe them out that would convince them to get out of the business of speculating the price is gonna go up.
Because the government would be releasing that is the oil reserves so.
If I think that's important.
I don't know what in the years so I don't get -- your -- -- on the president's.
Bob.
Then the president's idea to do this sentiment that I don't see that you're you're not sold on about what the president's -- to attempt to lower the prices.
Well I would I wouldn't I wouldn't go that for I think that what the president outlined today from what I saw.
Was giving the CFTC.
Who's the the regulator the authorities.
To go investigate this that right now they're.
Under threat of having the enforcement budget radically cut.
It in the in the budget process.
They don't have.
The technology to monitor these things in real time and people are keeping that data that will allow us to be able to figure out if there's one.
-- if there's one party or one and it investment house or whatever might be it's doing something.
I do think we ought to have the authority and the ability to to monitor that.
The only thing I don't know -- -- how important that is I think you got to get people closer involved in -- to answer that one well.
If they have the president's idea is at cracked one.
I take it that it's it's a long term one it's not gonna it's not gonna have -- would be given the CFTC enforcement powers is not gonna bring the prices down in -- you meet in -- near future upset fair statement.
I'd say that's an interim I mean if you raise an interesting point it depends a lot on the psychology of the speculators.
So.
If you were a speculator betting that the price is gonna go up and that you're try and I don't know corner of the marketer -- drive things in a certain way.
If you knew that the police are about to show up you.
You know you get out of there was yet when the alarm goes off so it could affect things in the short term if -- if those guys are our major playing a major role in it.
And as I say about the strategic petroleum reserve.
If you.
Outlined a policy.
Of not just dumping it all out image -- short run as best you can't but let's -- -- -- policy.
Of of getting it tuned to -- -- where it should be I think that would also drive some of those guys out.
Austin thank you -- -- -- back thanks -- You -- resilient.
