Obama may open Strategic Petroleum Reserve

June 9, 2011 at 4:30 AM
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WASHINGTON, June 9 (UPI) -- President Barack Obama may open the U.S. Strategic Petroleum Reserve to lower gasoline prices after OPEC failed to boost oil production, a spokesman said.

"He is looking at a lot of options," White House spokesman Jay Carney said after the Organization of Petroleum Exporting Countries ended an angry meeting in disarray, threatening to cause gasoline prices to rise further.

"We believe that we are in a situation where supply is not meeting demand," Carney said, attributing the imbalance in part to the Libyan conflict, which he said has removed 1.5 million barrels a day from the market.

The petroleum reserve -- an emergency fuel store of crude oil maintained by the U.S. Energy Department in the Gulf of Mexico -- "is designed to deal with disruptions in oil supplies," Carney told reporters Wednesday. "And the president considers that an option going forward," depending on whether the White House determines if the current situation leads to a disruption or simply a short-term market fluctuation.

Amy Myers Jaffe, senior energy analyst at Rice University's Baker Institute for Public Policy in Houston, told the Los Angeles Times the OPEC disarray, combined with rising demand, could push U.S. pump prices up to an average $4.25 a gallon, just as prices had begun to drop.

Regular gasoline averaged $3.75 a gallon Wednesday, down 21 cents a gallon from a month ago, when it was $3.96 a gallon, but up $1.03 a gallon from a year ago, when it was $2.72 a gallon, AAA said.

University of Maryland economist Peter Morici told the newspaper expensive foreign oil was squeezing the life out of consumers and leaving employers unsure about expanding their workforce.

"Too many dollars go abroad to purchase Middle East oil," Morici said. "This leaves U.S. businesses with too little demand to justify new investments and hiring, too many Americans jobless and wages stagnant, and state and municipal governments with chronic budget woes."

OPEC, which generates 40 percent of the world's oil, said at the end of its meeting Wednesday it remained committed to the production quota of 24.85 million barrels a day set in December 2008.

But Saudi Arabia, the world's largest oil exporter and the only OPEC country able to significantly increase production, said it would continue raising its output to satisfy world demand.

The U.S. Strategic Petroleum Reserve is the world's largest emergency oil supply, currently holding 726.5 million barrels of crude, a United Press International review of its inventory figures indicated Thursday.

This equates to 34 days of oil at current U.S. consumption levels of 21 million barrels a day.

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