Business

Flipping the bird at energy traders

It’s really only a symbolic gesture.

But Washington’s move yesterday to reduce the price of gasoline by pulling oil from its Strategic Petroleum Reserve is a gesture known to people around the world — it’s the middle-finger salute, this time directed at energy speculators.

Oil prices fell sharply after the announcement.

But energy costs had already been declining for weeks, mainly because Saudi Arabia — the largest oil producer in the world — has made an effort to push them down and because there is already so much oil out of the ground and gasoline in storage tanks.

The move against speculators had a bigger impact yesterday because the world economy is clearly weak, and even the greediest speculator betting on rising prices can’t make a credible case that oil is in short supply. And the notion that the world is running out of oil — a favorite of the fast-money crowd in recent years — is laughable at the moment.

Yesterday’s action came in the form of an announcement from the International Energy Agency, which said it would release 2 million barrels of reserve oil a day for the next 30 days. Half of that 60 million barrel total will come from the SPR in the US.

The official reasoning was amusing, as well — to make up for oil supply disruptions from the Libyan conflict.

The real motive was to push back against speculators who’ve been using the excuse of Middle East and Libyan unrest to drive prices higher. Saying so, however, is a political no-no, since it’s difficult to make Wall Street a villain and ask it for contributions to political campaigns at the same time.

Let me be the first to say it’s about time Washington did something.

According to the US Energy Information Administration, there are currently 363.8 million barrels of oil in storage in the US, not counting the 727 million emergency barrels in the SPR. Despite all the unrest in oil-producing nations, that amount is down only 0.4 percent from levels at this same time last year.

Right now, gasoline stockpiles are 314.6 million barrels, which is 1.4 percent lower than at this time last year. But the reduced gasoline inventory levels aren’t being caused by an increase in demand. The modestly lower gasoline supply is being caused by refiners running their gasoline manufacturing facilities at only 89.2 percent of capacity.

Refineries were typically running in the low-90 percent of capacity before the recession.

Peter Beutel, head of energy research firm Cameron Hanover, says gas prices have declined 50 cents a gallon at the wholesale level in the past few weeks. But only 29 cents of that drop so far has been passed along to consumers.

Peter and I have spoken about the speculative situation often, and I’ve quoted him in this column before. “This is actually something intelligent done by someone in government,” said Beutel, who seemed surprised. “It shows that the govern ment is more than willing to add oil to the mar ket.”

Tapping the SPR comes just a day after the Federal Reserve revised down its fore cast for the economy and all but admitted it was out of ideas.

About $18.25 billion a year will be added to the economy because of the lower fuel costs since May. While that’s a welcome gain for consumers, it’s not nearly enough to, say, revive the housing industry or get people back to work.

That fact was acknowledged by the stock market, which declined yesterday despite the drop in oil prices. john.crudele@nypost.com