Tags: Schork | oil | stockpiles | reserve

Energy Expert Schork: Weak Jobs Report Ups Odds of Tapping Oil Stockpiles

Monday, 10 Sep 2012 08:54 AM

The dismal August jobs report increases the odds that President Barack Obama will tap the country’s Strategic Petroleum Reserve (SPR), said Stephen Schork, president of the Schork Report, which tracks global oil prices for traders and investors.

However, some believe if Obama does tap the SPR before the election, he would be accused of doing so only to lower gasoline prices to appeal to voters.

The economy added a net 96,000 jobs in August, the Bureau of Labor Statistics reported, well below market forecasts for around 125,000.

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“The numbers are so poor that it does increase the likelihood” of the White House tapping the reserves, Schork told the Business Insider.

Nevertheless, tapping the country’s crude stockpiles might not help much, Schork added, as crude supplies are already plentiful.

“The issue is not a lack of crude oil,” Schork said.

“It’s lack of gasoline. We have crude, and we have lack of refining capacity.”

Hurricane Isaac prompted many refineries along the Gulf of Mexico to halt operations, while several refineries closed earlier this year when crude prices rose.

High crude prices make doing business for refineries too costly, as customers buy less fuels and other end products when their prices go up.

A gallon of regular gasoline is averaging around $3.82 nationwide, according to the AAA Daily Fuel Gauge Report.

White House officials have reportedly met with industry experts to discuss the feasibility of tapping crude stockpiles.

Other analysts agree that the White House will tap the nation’s crude stockpiles to lower prices in an election year.

“Global refining runs are poised to move into their seasonal autumn trough, meaning an SPR release over this period could be more effective. And with speculators relatively long, shaking out this length could ease pressure on oil prices,” Eric Lee, a commodities analyst at Citi, wrote in a note, according to CNBC.

However, James Iuorio of TJM Institutional Services told CNBC that tapping the reserves would be seen as pandering to voters.

“If there was a release of the SPR at this point, I believe the market would interpret it as purely political and a desperate act,” he said.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

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