Why is Obama tapping the Strategic Petroleum Reserve, really?
The administration's decision to release 30 million barrels of oil from the Strategic Petroleum Reserve is pure politics, say some. The White House says it's trying to offset a drop in Libyan light sweet crude – needed for gasoline – at the height of the summer driving season.
(Page 2 of 2)
Some Republican leaders tried to walk a fine line – agreeing that it was a good idea for Americans to have lower prices at the pump but arguing it was a bad idea to do it by releasing oil from the SPR.Skip to next paragraph
Subscribe Today to the Monitor
“Everyone wants to help the American people and lower prices at the pump – especially now, in tough economic times,” said House Speaker Rep. John Boehner (R) of Ohio in a statement. But, he added, “by tapping the Strategic Petroleum Reserve, the president is using a national security instrument to address his domestic political problems.”
Democrats fired right back. Democratic leader Nancy Pelosi of California took some credit for the action since Democratic members of the House had asked the President to release the SPR oil in March. And, she blamed speculators and special interests – which she claimed were protected by Republicans – for standing in the way of lower gas prices.
Each time the national reserve has been opened, the price of oil has dropped between 9 percent and 33 percent, said Sen. Jay Rockefeller, who sent a letter to President Obama on March 3, asking him to release oil from the SPR if further disruptions took place.
On Thursday, just before the close, the price of oil was $3.83 a barrel lower on the New York Mercantile Exchange. The price of gasoline on the futures market was sharply lower as well.
The US move is only the third time oil has been released from the SPR, which is now at a historically high level of 727 million barrels. The other times were during the Persian Gulf War and after Hurricane Katrina disrupted supplies in 2005.
Business reaction was divided. Karen Harbert, president and CEO of the US Chamber of Commerce’s Energy Institute called the release “ill-advised and not the signal the markets need.” Instead, she called on the administration to increase domestic production of oil.
However, the Air Transport Association, which represents the nation’s major airlines, said the move would help its members. “Every $1 drop in the annual price of a barrel of oil translates to $415 million in reduced annual jet-fuel expenditures, so every little bit helps,” said ATA President and CEO Nicholas Calio.