Editorials Urge President Obama To Protect Emergency Oil Supplies

April 13, 2012

Administration officials have indicated President Obama is contemplating tapping the Strategic Petroleum Reserve. Such news has sparked an outcry among national security experts and editorial boards who are urging the president to refrain from such misuse of our nation's emergency oil reserves. They argue the SPR was created for emergencies only and should not be used as a political tool. To help protect the SPR and promote long-term supply solutions over political gimmicks, Rep. Cory Gardner (R-CO) has introduced legislation to ensure we do not tap our emergency reserves without also moving forward with a plan to develop our country's untapped energy resources....

In Case You Missed It…

Let's Keep Our Hands Off the Emergency Oil Supply
The New York Times
April...9, 2012
By JAMES L. JONES and JASON S. GRUMET

AS oil and gasoline prices rise, political pressure to tap the roughly 700 million barrels in the national Strategic Petroleum Reserve is building, including among some in Congress. The global oil market is fundamentally strained and suffering from an array of unwelcome but unremarkable problems. Yet the oil reserve is neither designed nor well equipped to address these chronic weaknesses. Instead it should be preserved to address an emergency disruption in supply…

While the Strategic Petroleum Reserve is not an effective tool to address the present circumstances, the president and Congress must take more strategic and lasting action to protect the public and the economy from the effects of $100-a-barrel oil and $4-a-gallon gasoline. Despite the traditional election-year rancor, there is actually considerable bipartisan agreement on what needs to be done. Increasing domestic oil production is extremely important to our economy and to reducing our trade deficit. …

Why Obama shouldn't tap U.S. Oil reserves
CNNMoney
April 4, 2012

As U.S. sanctions on Iran tighten and gas prices reach record levels, it is becoming more likely that a release of oil from the U.S. Strategic Petroleum Reserve is in the works. Yet analysts aren't convinced tapping the SPR is a good idea. …

"Only physical supply interruptions merit a draw," said Kevin Book, managing director of research at ClearView Energy Partners. Rising oil prices over the last couple of months are a sign that things with Iran could get really bad, and that "we shouldn't be burning our safety net in our gas tanks." …

It's unclear what impact more oil from the SPR would have on gasoline prices right now.

While global oil prices have been soaring, U.S. oil prices are relatively lower due to a glut of oil in the Midwestern part of the country, where most of the SPR crude would likely flow to.

But since U.S. gasoline prices are pegged to the cost of global crude prices, which are running $20 or so a barrel over U.S. crude, just tapping the SPR may not help at the pump. ...

Iran sanctions don't require drawing on strategic petroleum reserve
Washington Post
March 31, 2012

…Still, the president should think twice before dipping into the backup, currently 700 million barrels, that Congress created in 1975 to protect against a "severe energy supply interruption." Though the average U.S. price of regular unleaded gasoline is almost $4 per gallon and is likely to rise along with Middle East tensions, that does not yet equate with the Persian Gulf War or Hurricane Katrina, to name two past emergencies in which presidents used the reserve.

As the president's statement noted, much of the recent tightness in global oil markets is due to what you might call "normal" political unrest in Yemen, Nigeria and South Sudan, as well as the Iran situation. It's far from clear that there is or will be any supply interruption, let alone a "severe" one, in the United States because of the Iran sanctions. Domestic production is rising. Saudi Arabia's oil minister says that his country's production capacity is 12.5 million barrels per day, "way beyond current levels demanded, and a reliable buffer against any temporary loss of production."

Yes, gas is expensive. High oil prices threaten to exacerbate Europe's economic plight, thus retarding the global recovery. But there are costs to tapping the strategic reserve more often than absolutely necessary. If you use stored-up oil now, you have to replace it later — which artificially drives up oil prices at that point. The oil markets are volatile enough already; why add the gyrations of U.S. gas prices to the list of imponderables on which speculators trade?...

Don't roll out the barrels
America's strategic stockpile of oil should be held back for a genuine emergency
The Economist
March 24, 2012

…Mr. Obama has form when it comes to tapping the SPR in dubious circumstances. Last February prices jumped when oil from Libya was cut off as the country descended into civil war. Some four months after the outbreak of hostilities, at a time when prices were falling again, reserves were released under the auspices of the IEA, at Mr Obama's prodding.

A bad idea then, a worse one now.

He should resist resorting to the same tactic this time, for two reasons. First, he risks draining reserves while there is a threat that Iran may try to shut the Strait of Hormuz, a narrow seaway through which 17% of the world's oil passes. This is exactly the sort of emergency that would justify using the SPR.

Second, the effort is likely to be ineffective, as the Libyan episode illustrates. The oil price fell immediately after the announcement of a reserve release, but it soon rallied and then stayed put roughly where it had been before the intervention. The SPR is a useful short-term weapon, but a puny one when set against a long-term crunch between supply and demand. …

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