President Barack Obama should release crude from the Strategic Petroleum Reserve to stem rising gasoline prices, three U.S. House Democrats said, a move the energy industry opposes.
“This most-recent run-up in prices is primarily the result of fear driving oil markets,” Representatives Ed Markey of Massachusetts, Peter Welch of Vermont and Rosa DeLauro of Connecticut said today in a letter to Obama. “We urge you to consider again deploying oil” in the reserve “to combat the rapid price escalations resulting from speculation.” The administration declined to comment on the request.
The American Petroleum Institute, the biggest U.S. lobbying group for the industry, said releasing oil from about 696 million barrels held in the reserve might push prices lower for a short time, if at all.
“It drains reserves that could be needed in a real supply emergency,” John Felmy, chief economist of the Washington-based group, said today on a conference call with reporters.
Gasoline prices at the pump climbed for 15 straight days, reaching $3.579 a gallon yesterday, the highest since September, according to AAA.com. Obama plans to make energy the focus of speeches this week, while Republicans cite rising gas prices to show the administration is against fossil fuels.
At the White House, press secretary Jay Carney said he hadn’t seen the Democrats’ letter and had no comment on the possibility of using the reserve or whether administration officials had considered a price that would trigger a release. “We take no possible response off the table,” he said.
Crude oil for April delivery increased 3 cents to $106.28 a barrel today on the New York Mercantile Exchange, the highest settlement since May 4. Futures have gained 14 percent in the past year.
Senators Jeff Bingaman, a New Mexico Democrat and chairman of Senate Energy and Natural Resources Committee, and Lisa Murkowski of Alaska, senior Republican on the panel, said the U.S. needs to keep the reserve well-stocked and use it in case of supply disruptions. House Republicans opposed using oil stocks to combat rising prices.
“This is a time-honored ruse used by Washington Democrats who oppose more American-made energy every time gas prices rise,” said Michael Steel, spokesman for House Speaker John Boehner. “The SPR is for severe supply disruptions, for example, if Iran blocks the Straits of Hormuz.”
The U.S. released 30 million gallons from the reserve during several weeks in July and August last year under an International Energy Agency effort to ease shortages of Middle East supply. The U.S. has withdrawn oil 18 times since 1985, including in 2008 after hurricanes Gustav and Ike struck the Gulf Coast.
The oil industry urged Obama to approve TransCanada Corp.’s Keystone XL pipeline, saying the project would add 700,000 barrels a day to U.S. supplies and lower the nation’s dependence on imports from the Middle East.
The trade group, which represents more than 490 companies, including Irving, Texas-based Exxon Mobil Corp. and London-based BP Plc, said gasoline costs are rising as demand for crude increases in China and India, and on concerns that political unrest in Africa and the Middle East will disrupt shipments.
China’s National Bureau of Statistics today reported energy use rose at the fastest pace in four years in 2011 and efficiency improved.
Gingrich Energy Message
Former House Speaker Newt Gingrich, a Republican candidate for president, said he would approve Keystone “the very first day” in office and open federal waters “so that we can develop the maximum amount of American oil and gas right here at home,” according to a transcript of a 30-minute message posted on his website.
The U.S. trade group praised the Obama administration’s agreement with Mexico reached on Feb. 20 that will open about 1.5 million acres of the Gulf of Mexico to energy development.
While developing additional oil fields will take years, markets are likely to react to the administration’s dedication to increasing supplies, Felmy said.
“Making a significant signal that you’re serious about moving forward with additional supplies can really have an impact,” he said during the press call from Washington.
© Copyright 2015 Bloomberg News. All rights reserved.