The U.S. is releasing 30 million barrels of oil from the Strategic Petroleum Reserve as part of an international effort to make up for disruption in Libya’s oil production, a decision aimed at increasing supply ahead of the nation’s summer driving season, Obama administration officials said Thursday.
“We’re heading into a period in which demand for oil tends to be at its highest,” a senior administration official told reporters. “This release is intended to address that increasing demand.”
The move drew immediate condemnation from Republicans and business interests opposed to tapping the emergency reserve for anything other than a critical cut-off of oil.
“The Strategic Petroleum Reserve was designed for energy emergencies, not political convenience. Releasing our reserves to calm the market is emblematic of an administration whose energy policy is irrational and counter-productive,” said Rep. Fred Upton, R-Mich., head of the House Energy and Commerce Committee.
“The Obama administration’s decision to release oil from the Strategic Petroleum Reserve is ill-advised and not the signal the markets need,” said Karen Harbert, president and CEO of the U.S. Chamber of Commerce’s Energy Institute.
“Our reserve is intended to address true emergencies, not politically inconvenient high prices. … With U.S. crude oil production expected to decrease by 90 million barrels in the next year, the administration should instead focus on increasing domestic production to improve our energy security, reduce our dependence on foreign oil and create thousands of jobs,” she said in a statement.
Thursday’s announcement coincides with a decision by the International Energy Agency to put in another 30 million barrels on the market from other nations. The IEA said that the percentage distribution of the combined 60 million gallons is based on the proportionate share of consumption. As a result, the U.S. is releasing 50 percent of the total while European countries release about 30 percent and Asian countries provide the remaining 20 percent.
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4 Responses
The price of oil is falling (at least as measured in dollars, yen, pounds or francs) due to falling demand and especially due to the serious economic in problems caused by excessive debt in several countries (particularly but not only Greece).
The disruption from Libya has had no effect on prices, suggesting it can best be ignored. The real motive is the need of politicians to find a way to boost popularity (the Romans had “bread and circuses” – we have oil). These reserves are for a real emergency when there are shortages and rising prices – not a minor disruption that doesn’t even slow down falling prices.
How much will the price of gas at the pump go down?
If they approve of more local drilling, then they can make it up.
#3
The chances of us being able to us “local drilling” to make it up are virtually zero. With the exception of the Arctic National Wildlife Refuge (ANWR), the amount of economically exploitable oil in North America is low and diminishing rapidly. ANWR comes with its own ecological impact (hence the political resistance to exploiting the area); deep sea drilling is difficult (witness Deepwater Horizon).