With the November election coming up, it could be tempting to release oil from the strategic petroleum reserve to ease some of the upward pressure on oil and gas prices.
However, a letter sent by Republican Senate Minority Leader Mitch McConnell along with Senate Minority Whip Jon Kyl of Arizona, Republican Conference Chairman John Thune of South Dakota, urges President Obama not to tap into the nation’s Strategic Petroleum Reserve.
“We strongly urge you to refrain from deploying this vital strategic asset unless and until a severe oil supply disruption occurs,” McConnell and others write in their letter.
“We must preserve the SPR for when we truly need it — unanticipated emergencies and severe supply disruptions,” the letter continued.
Tapping into the nation’s oil reserves has brought down oil prices before, but the effects are temporary.
“Remember that the president already tried exactly the same strategy last summer,” James Hamilton, professor of economics at the University of California, San Diego, previously told The Daily Caller News Foundation. “What happened was the price of oil went down a few dollars a barrel for a few days, but within a week the price of oil was right back where it had been before the release.”
“I see little reason to anticipate anything very different if we tried the same thing again,” he concluded.
In August, White House staff said that a release form the strategic reserves was “on the table.”
“Well, as we’ve said for some time, a release of the Strategic Petroleum Reserve is an option that’s on the table, but I don’t have anything to announce further on that topic at this point,” White House principal deputy press secretary Josh Earnest told reporters in a press conference last week.
“The administration does carefully monitor the global oil market and the global price of oil. So it’s something that we watch closely because of the economic consequences for changes in that market and changes in the price,” Pearston told reporters.
Again in mid-September, White House officials hinted that the option was still being considered.
“In regular consultation with our international partners, we monitor global oil markets and we keep all options on the table to deal with disruptions if necessary,” said White House press secretary Jay Carney.
“We simply monitor the situation mindful of the impact that higher global oil prices have on global economic growth, American economic growth, and mindful of all the various implications that arise when you have a situation like that,” Carney added.
At the end of August, the Obama Administration announced it would loan out 1 million barrels of oil in the aftermath of Hurricane Isaac. a loan is not the same thing as a release, and the administration has loaned oil in emergency-type situations eight previous times, reports the National Journal. The most recent loan came after Hurricane Gustav in 2008.
A release now would mark the second time that the Obama administration has released oil from the reserve to stabilize oil prices. Last year, President Obama released 30 million barrels of oil to offset the disruption in the global oil supply caused by fighting in Libya. This was matched by 30 million additional barrels released from stockpiles in other countries.
Only three times in history has a president released oil from the reserve. The first was by President George H.W. Bush in 1991 during Operation Desert Storm. The second release was by President George W. Bush in 2005 because of the destruction wrought by Hurricane Katrina on the oil industry in the Gulf of Mexico, and the third was by President Obama last year.
The reserve was established in the aftermath of the 1973-74 oil embargo and was intended to give the President a tool to respond to disruptions in the oil supply that threaten the U.S. economy.
The petroleum reserve has a capacity of 727 million barrels, making it the largest stockpile of government-owned emergency crude oil in the world. The reserve currently has 695 million barrels of oil.
“There are plenty of storm clouds on the horizon,” the Senate Republican leadership team’s letter concluded. “The government must adequately shelter the American people and vigorously protect their rainy-day fund.”
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