By announcing this week that he would slowly release about 5 million barrels of oil from the 590 million barrel U.S. Strategic Reserve, President Bush is trying to bring some sanity back to the world oil market where panic seems to have outrun reality.

Fear, instability and rumors of war have turned the international oil market into a panic-stricken arena where normally cool-headed traders are acting without thinking. As a result, the crude oil futures market in New York reached an all-time high.This might be justified if there were a real oil shortage as a result of the crisis in the Persian Gulf. But that is not the case.

Iraq's invasion of Kuwait and the resulting U.N. embargo removed about 4 million barrels a day from the world oil market. A significant portion of that has been made up by higher production from other oil-producing countries.

Economists agree there is no real shortfall of oil in the United States, despite the embargo, although the market is tight, with little reserve capacity. But the soaring price of oil has little to do with present reality and a lot to do with fears of the future.

Bush blamed the unprecedented rise on unsubstantiated panic and profiteering and issued a warning against speculators who try to trade on fear to drive up the price of oil and make a quick fortune.

Clearly, releasing 5 million barrels of oil from the strategic reserve at the rate of 167,000 barrels a day over a 30-day period will not make a significant dent in the huge oil market, even domestically. But it does send a message to calm the fears of anxious traders. And it carries an unspoken threat to release more oil if speculators don't calm down.

However, the president should be cautious in using the Strategic Oil Reserve as a mechanism to damp down prices. The reserve was not created as a tool for controlling the cost of a barrel of oil. It was established to give the country an emergency supply in case imports were to be cut off entirely.

If war were to erupt and oil fields all over the Middle East were engulfed in flames from suicidal Iraqi attacks, the United States might really need the oil in the Strategic Reserve to keep the nation functioning until some sense of normal Middle East oil production was restored.

The hard fact is that the United States has allowed itself to become dependent on foreign suppliers for half its oil needs. Let's not fritter away the strategic reserve in an attempt to control prices.

Using 5 million barrels as an experiment is justified. But the United States must hoard the reserve against the day when the crucial issue will be actually having enough oil - and not just how much it costs.