No high-octane solution

The Senators claimed a price reduction of from 15- 30 cents per gallon was possible. The president rejected using the reserve to lower gas prices at the pump.

Editorial writers generally agreed with the president. "The reserve is designed to help the nation cope with short-term disruptions in supply caused by terrorist acts or instability in oil-producing countries," wrote The Courier, a Maryland daily.

Terrorists would like nothing more than to attack and severely cripple our infrastructure and threaten our energy supplies. Tapping the reserve would weaken it and could exacerbate the problem should terrorists ever successfully mount an attack against our energy sector.

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In its editorial on the subject, the Santa Cruz Sentinel wrote:

President George W. Bush on Wednesday correctly dismissed a call by a group of Democrats, including California senators Barbara Boxer and Dianne Feinstein, to tap into the nation's oil reserves. ... Even Democratic presidential challenger John Kerry is not signing on to this proposal, and the Bush administration has done a good job of filling up the oil reserve.

A consortium of European countries opposed any drawdown of petroleum reserves in order to lower gas prices, Retuers reported on Thursday:

High prices are likely to continue through the summer. A "perfect storm" is causing the run up in the cost of crude oil, and thus the cost of gas, say oil industry experts and OPEC officials.

Ali Rodrigques, head of Venezuela's state oil company, told INDOlink: " Demand is being boosted by a number of factors, including the uncertainty in Iraq, vast demand from the fast-growing Chinese economy, and low stocks in countries across the developed world who are choosing to stockpile because of tensions in the Middle East." He also blamed speculators for some of the price increases.

OPEC's most recent figures show that its 10 members who have an agreement to cap production, are already quota-busting, that is, producing more than they stated they would, to the tune of 2.1 million barrels a day above the 23.5 million target. This limits any quick increase in production from OPEC, reports INDOlink.

With that kind of over-production, experts say, only Saudi Arabia and the UAE have much headroom to pump more. For other members, a quota rise would only legitimise their existing output.

And increased demand for oil continues to be a global, not a US phenomenon.

The Phillippines announced that "it and its Asian neighbors should have their own US-style strategic oil reserve to help alleviate what its energy secretary Vincent Perez called "near-crisis levels" of oil supply, reports INDOlink.

The Korea Herald reports that:

Economies of the United States and Japan have been showing visible signs of recovery, ...[suggesting] an even greater global appetite for oil. China's economy is also far from slowing despite central government efforts to rein it in. It is expected to grow a minimum 7 percent this year.

A major factor driving up fuel costs is " the diversion of oil from federal leases to the Strategic Petroleum Reserve," said James C. May, president and CEO of the Air Transprot Association, a trade group representing the nation's leading airlines.

The US continues to fill its strategic petroleum reserve. The reserve is a cache of 660 million barrels, or two months worth of oil imports, that is stored in salt domes on the Gulf Coast. It was created in 1973 to give the United States some security with supplies after the oil embargo.

Rather than tapping SPR, "the ATA has sought a 'go-slow' middle ground that recognizes the strategic importance of the reserve," said May.

Under ATA's approach, the government would not fill the SPR when oil prices exceed $30 per barrel. Instead, oil that normally would be diverted to the reserve would be reintroduced into the U.S. market, increasing supplies and lowering fuel prices....No actual oil would be released from the SPR under ATA's proposal. New reserve deliveries would simply be postponed when oil prices are high.

Purnomo Yusgiantoro, president of the Organization of the Petroleum Exporting Countries pointed to refining capacity as a lead factor in short supplies and high prices, reports The New York Times.

Oil industry officials and others are blaming part of the run-up to $2-a-gallon gasoline on air pollution regulations that are forcing refiners to supply 18 different blends of gas around the country, including four in New England alone, reports The Boston Globe.

The proliferation of mandated "boutique blends" of gas has snarled supply lines for gasoline and left regional suppliers vulnerable to sudden shortages, which has built in a permanent premium in gas prices even before recent Middle East turmoil and OPEC supply reductions began pushing prices higher still.

A group of state attorneys general, who requested that the federal government investigate possible price collusion by the major oil companies, acknowleded that federally mandated regional air-polluiton regulations were partially to blame for higher energy prices, reports The New York Times.

The state attorneys general agreed on Thursday that adopting a single national standard could alleviate some supply problems.... Analysts said that would also make it less difficult for refineries overseas to supply the American market.

Responses to the current spike in prices are likely to have little short term effect. But the actions of South Korea, the world's fourth-largest oil importer, point the way for worldwide efforts to secure a more-stable energy supply in the long term, the Korean Herald reports.

To combat the high energy prices, the government has been increasingly considering tax breaks for companies stepping up research and development in energy conservation technologies and urging the public to cut back on consumption.

Also...
• The strategic petroleum reserve ( howstuffworks)
• President order's reserve filled ( The White House)
• Petroleum reserves ( Ofice of Fossil Energy)
• Elephant-hunting SUVs driving oil prices ( Houston Chronicle)

• Feedback appreciated. E-mail Jim Bencivenga .