This is the Cato Daily Podcast for Wednesday, March 16, 2011.

I'm Caleb Brown.

When the price at the pump hits a certain range, the call goes out, release oil from the Strategic Petroleum Reserve.

But the arguments in favor of that policy serve the do-something impulse of voters and

lawmakers over sound economic reasoning.

So says Peter Van Doren, editor of Regulation magazine.

And it makes some amount of sense, right? I mean, if you've got this thing and it's got 700 million barrels of oil in it and you've only

used it three times in the history of its existence maybe that's too little. Why not use, I mean if you put more supply

in the market prices will go down. But then critics say but it's not big enough

and you might need it for the really big one, blah, blah,

blah, and there actually is a protocol. I mean, these, the agreements that were used to set up

the International Energy Agency stockpile which is in Europe and then hours sort of

they use the criteria of a 7% reduction in world supply as a critical threshold.

And it turns out that doesn't happen very often.

The Suez Canal crisis in 56

was actually the largest supply reduction in world oil market

history and that was on the order of 10%. But it's but since the 70s we

actually haven't had the Iran-Iraq war was rather large, but it wasn't 10%.

And so the current Libyan reduction is on the order of 1.

Something percent.

And most analysts say you need to hold your powder dry

and save this inventory for a bigger event.

...