Recently one of the most discussed concerns for the U.S. internal oil product market was whether President Barack Obama is going to tap strategic oil reserves of the country. U.S. Strategic petroleum reserve (SPR), located in four salt domes along the Texas and Louisiana Gulf Coasts, hold around 700 million barrels, while the US daily consumption, according to the Energy Department, has been around 18.8 million barrels / day.

Obama might open the reserves to hold gasoline prices as an asset in his election campaign, but analysts say the impact may not be worth the effort: the reserves are part of the US energy safety net, not a tool for corrective market interventions. Still, this will hardly have a fundamental impact on global prices, says Kyle Cooper, managing director of research at Cypress Energy LP, Houston-based hedge fund.

“The oil price has been driven recently more by global macro and other financial issues than by US oil inventories”, he said in an emailed comment. “The market perception seems to be that US inventories, especially land locked Cushing inventories which are generally the basis for the WTI future contracts, have little influence on the more global Brent based world market.”

Thus, the US inventory data may have little influence on the US oil price depending on multiple international developments in Iran, Spain, and Nigeria, or equity movements, or US dollar movements or numerous other factors that seemingly have much more influence on oil price.

Another policy move of Obama, if he stays in office in 2013, is eliminating several tax preferences on fossil fuels. The most revenue-raising measure is supposedly to repeal expensing of intangible drilling costs (IDC), which will garner about $13.9 billion by 2022. The measure, now effective, allows deducting 70 to 100 of IDC, thereby encouraging new exploration projects.

Domestic oil and gas policy has been a matter of acute debates between Obama and Republican candidate Mitt Romney. Still, abolition of tax preferences, even if applied, will hardly weigh on the global crude oil market, thinks James Coan, Energy Forum Research associate at Rice University.

“I don’t think the race between Obama and Romney will affect the oil markets much. Obama will continue to try to eliminate the fossil fuel tax preferences, but it is highly doubtful that he will be successful", he said in an emailed comment. "Even if they were eliminated, it would not have much effect on the oil market, though it would tend to increase prices", he added.

Aram Gareginyan