Western nations agreed to dump 60 million barrels of government-held oil stocks onto the global market last Thursday. President Barack Obama announced that America would release 30 million barrels of oil from the Strategic Petroleum Reserve.

The announcement means that approximately 2 million barrels of oil per day will be released over the next month—an amount that exceeds the 1.2 million barrels per day of lost Libyan oil production due to Europe’s attack on Libya.

Oil traders appeared shocked—with the price of oil immediately tumbling 6 percent. U.S. administrations have only dumped oil on the market twice before: once in the aftermath of the first Gulf war, and then again following Hurricane Katrina’s destruction of New Orleans.

According to some analysts, the move underlines the severity of the global economic slowdown, and the desperation Western leaders are feeling. “The move is significant, as it represents a reach by [International Energy Agency] member countries for the remedy of last resort to high oil prices,” said John Kilduff, a partner at Again Capital. “Clearly, the energy price spike is being cited as the reason for the economic slowdown and this is a reaction to that. The Libyan outage provides good cover.”

As of June 24, West Texas Intermediate Crude was selling for $91.02 per barrel, which is down over $4 from where it was when the announcement was made.

The move to draw down strategic oil reserves, however, will probably have only a small effect over the short term. Oil prices may temporarily fall, and summer drivers may temporarily feel better, but oil prices will probably soon return to their upward trajectory.

The market knows that the further governments draw down their emergency supplies, the sooner they will be back filling them up. Once the extra oil supply is used up, the market will start pricing in future restocking by Western governments.

At best, the West has bought a small temporary respite in oil prices.

But the decision to sell America’s oil reserves also highlights just how economically fragile America’s “recovery” is. And also the impossibility of America solving its debt problems.

Think of it this way. Each day America sells 1 million barrels of oil from its reserve, it earns $91 million. Over the course of a month, America will receive $2.7 billion.

Yet due to America’s deficit, the nation needs to borrow a full $4.1 billion—each and every day.

Think about that! Even if America magically became as big an oil exporter as oil heavyweight Canada (which exports about 1 million barrels of oil per day), it still couldn’t make enough money to come remotely close to balancing its budget.

America’s total strategic petroleum reserve holds 720 million barrels of oil. That would be enough to keep every car, truck and train in the nation running at current rates for two months if the nation could not import a single drop of oil. It is the largest reserve in the world by far. Its total value is $65 billion. That might sound like a lot, but it is a literal drop in the bucket compared to America’s projected deficit of around $1.5 trillion. And it is a tiny pin dot compared to the nation’s official $14 trillion debt.

America would need to sell the equivalent of 23 Strategic Petroleum Reserves—just to cover its borrowing needs this year!

Think of it this way. Even if America were to invade Saudi Arabia, Russia, Iran, China, Canada, Mexico, the United Arab Emirates, Brazil, Kuwait, Venezuela and Iraq—and sell all their oil production—it still couldn’t balance this year’s deficit. These nations are the 11 biggest oil-producing countries in the world.

The president’s decision to release oil from the strategic reserve may be designed to help the economy, but the cold reality is that it is a drop in the ocean of what is needed.

For more information on what future oil shortages will result in, read Ron Fraser’s June 13 column, “Strategic Implications of the Coming Oil Shortage.”