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Wednesday, March 09, 2011

Do NOT Tap Strategic Petroleum Reserve to Influence Market

PRESIDENT'S CORNER

By Norris McDonald

About every ten years or so, the issue of tapping the Strategic Petroleum Reserve (SPR) comes up as a tool for influencing rising oil prices.  DO NOT DO IT.  Never use the SPR to influence market prices.  We have been consistent in this message over our quarter century existence.  The reserve is just that, a strategic repository established to address a significant cut off in America's oil supply.

Now the Obama administration is considering releasing oil from the Strategic Petroleum Reserve to help Americans facing a spike in oil prices as a result of unrest in the Middle East and Africa.  White House Chief of Staff William Daley stated Sunday on NBC's Meet the Press"  that, "The issue of the reserves is one we're considering. It is something that only is done -- and has been done in very rare occasions. There's a bunch of factors that have to be looked at. And it is just not the price."

Oil prices have skyrocketed in recent weeks, climbing to nearly $105 per barrel on Friday from about $90 one month ago. That puts the price of a gallon of gas at a national average of $3.50, according to AAA.

The Strategic Petroleum Reserve contains 727 million barrels of oil. The caverns are designed as a storage facility to tap domestic reserves in case of a national emergency. In 2005, President Bush authorized the Department of Energy to approve loans of 13 million barrels of oil to refineries in Louisiana whose supply was cut off after Hurricane Katrina. This was an appropriate use of the reserve. (FOX News, 3/6/2011)

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