Oil price policy changes

It is hard to say what are the implications of the IEA use of emergency powers to release oil stockpiles. Some have started to call this QE-3 lite. This is a form of "quantitative easing of price congestion. Others have referred to this as a "smart bomb" that will place a threat on the oil market. If oil prices try to rise, the IEA will push them lower. Some have been saying that the IEA coordinated their action with the GCC to increase production. The IEA is short-term. The GCC production increases will be on-line in three months. The IEA supplies will serve as reduce price pressure on Libyan light sweet production.

The important policy change is that oil consuming countries will try and control the price of oil by selectively increasing supplies from their emergency reserves before there is an emergency. It is an odd policy. The oil addicts want oil at a cheaper prices. They will attempt to get it through using more supply, their special supply. This reminds me of the effectiveness of foreign exchange intervention. It will not work if there is no change in demand. This use of emergency supply is not a viable policy.