High oil prices put focus on Strategic Petroleum Reserve
Stop adding to the oil reserve, some say.
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The price of oil is moving closer to $120 a barrel, up almost $19 a barrel for the month. Gasoline stations can barely change their prices fast enough, and the cost of regular grade hit a record $3.54 a gallon on Wednesday morning, according to GasPriceWatch.com.
The driving club AAA is raising its estimate of Memorial Day pump prices to $3.75 a gallon, up 25 cents a gallon from its earlier prediction.
Proponents of the government taking action to ease the crunch say that storing oil at a time of soaring prices, in what is called the Strategic Petroleum Reserve (SPR), does not makes sense. Some want some oil released in the hope that it will drive down prices. Opponents counter that using the SPR would probably have little impact. In fact, they maintain, as does President Bush, that there is no emergency.
But on the campaign trail, the prospect of using the nation's rainy-day supply is catching on. Last week, Sen. John McCain, the Republican candidate for president, called for the government to stopping adding to the reserve. A week ago at a candidates' debate in Pennsylvania, Sen. Hillary Rodham Clinton (D) said she would not only stop adding to the reserve, but would also release oil to try to drive prices down. Sen. Barack Obama, the other Democratic candidate for president, believes the SPR should be used for short-term supply disruptions, but he does not believe it should be currently tapped, according to Jason Grumet, an adviser on energy to Senator Obama. Like Senator McCain, however, Obama would stop adding to the SPR at these prices, Mr. Grumet says.
Despite the candidates' wishes, Mr. Bush maintains that the SPR is off limits, to be used only in the event of a natural catastrophe or a major supply disruption overseas.
"The Department of Energy will continue to fill the Strategic Petroleum Reserve at very modest rates to provide an added layer of protection in cases of severe disruption," says Megan Barnett, a spokeswoman for the agency in Washington.
The Energy Policy and Conservation Act of 1975 established the reserve. Signed into law by President Ford, the act gives the president the sole authority to decide when to release oil from the reserve. Congress has discussed automatic triggers for release but has never changed the law.
Facts about Strategic Petroleum Reserve
Current inventory: 701.3 million barrels
Current storage capacity: 727 million barrels
Highest inventory reached: current level of 701.3 million barrels. The previous peak was 700.7 million barrels in late August 2005.
Length of time that the reserve could currently cover a halt in oil imports: 58 days
Average price paid for oil in the reserve: $27.73 per barrel
Maximum drawdown capability: 4.4 million barrels per day
Time needed for the reserve's oil to enter the US market: 13 days from a presidential decision about the reserve
Source: US Department of Energy
Photo: A tanker delivers crude oil to the reserve. Energy Department/AP/file