STEVE CHIOTAKIS: The International Energy Agency made a surprise announcement today. It’s going to release 60 million barrels of oil from its strategic reserves — half of that will come from U.S. reserves. Oil prices have already dropped today to about $90 a barrel.
Marketplace’s Nancy Marshall Genzer joins us now live from Washington. Good morning, Nancy.
NANCY MARSHALL GENZER: Good morning Steve.
CHIOTAKIS: So why the surprise announcement? Is this really necessary?
MARSHALL GENZER: Well, the International Energy Agency wants to ease some short-term shortages in the oil supply mostly caused by the turmoil in Libya. It’s not going to make a huge difference Steve, but it could boost consumer confidence because gas prices are expected to be a bit lower now this summer.
CHIOTAKIS: So, we’re not getting another economic stimulus package, Congress is busy cutting the budget. Will this sort of be an energy stimulus if you will?
MARSHALL GENZER: Some people think it could be. Among them, Adolfi Laurenti. He’s the deputy chief economist with Mesirow Financial in Chicago.
ADOLFO LAURENTI: It’s important because one of the missing ingredients of this recovery has been consumer spending. Higher gasoline prices, the result of higher oil prices, really works as a tax on American families. You spend more to fill the tank, you have less to spend on anything else.
The average price for a gallon of gas in the U.S. is now $3.61 — probably a lot more than that for you in Los Angeles. And, of course, this announcement on the strategic reserves comes just as the summer driving season is underway. The hope is people are going to spend more during their summer vacations if they’re not hit quite so hard at the pump.
CHIOTAKIS: Marketplace’s Nancy Marshall-Genzer reporting live from Washington. Thank you.
MARSHALL GENZER: You’re welcome.
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