June 23 (Bloomberg) -- Republicans called the Obama administration’s plan to tap the Strategic Petroleum Reserve a political move, while some Democrats said the effort to ease shortages may be too little, too late.
The U.S. release of 30 million barrels of oil accounts for half the amount the International Energy Agency plans to deliver to the market to ease shortages of Middle East supplies triggered by civil war in Libya, the Energy Department said today in a statement. Republicans joined the oil industry in saying the release wasn’t needed and more drilling is.
“We should look to develop our true oil reserves in the Gulf, Alaska, the Outer Continental Shelf, and our public lands,” Representative Doc Hastings, a Washington Republican and chairman of the House Natural Resources Committee, said in a statement. “The Strategic Petroleum Reserve is intended for situations when there’s a dramatic supply shut down, not to achieve short-term political gain.”
The plan would have been “more timely” had oil been released when Libyan supplies were first disrupted, said Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, a New Mexico Democrat.
The U.S. has 727 million barrels of crude oil stored in caverns along the Gulf of Mexico coast. The reserve was established to counter disruptions after the Arab oil embargo of 1973 to 1974. The U.S. has released oil from the stocks 17 times since 1985, most recently in 2008 after hurricanes Gustav and Ike struck the Gulf Coast. The release of about 1 million barrels a day under the IEA plan will occur in the next 30 days, according to the statement.
Summer Driving Demand
The decision to release oil from the Strategic Petroleum Reserve, part of an international move to release 60 million barrels, was made after months of consulting with allies and oil producing nations, according to officials, who briefed reporters on condition they not be named.
The release of light, sweet crude represents less than 5 percent of the reserves and will help meet U.S. summer driving demand, the official said. The first of the draw will be offered for sale within 24 hours, the administration official said.
“There is no supply emergency,” Bill Bush, a spokesman for the Washington-based American Petroleum Institute, said today in an e-mail. “We could and should be taking steps that would increase our own production by 2 million barrels a day or more for decades.”
Democrats led by Representative Edward Markey of Massachusetts urged President Barack Obama to use the reserves as gasoline prices were rising. Adding 30 million barrels “will have a huge effect on the everyday lives of American families,” Markey said today in a statement.
The president should consider additional releases, “if this dollop proves to be insufficient,” Senator Charles Schumer, a New York Democrat, said in a statement.
Oil for August delivery on the New York Mercantile Exchange declined $4.25, or 4.5 percent, to $90.16 a barrel at 11:18 a.m. The commodity has gained 19 percent in the past year.
Average prices for gasoline at the pump have declined for 20 consecutive days, and yesterday fell to $3.61 a gallon, according to the AAA travel group. The price was $2.74 a gallon a year earlier and reached a high of $3.985 on May 4, the group said.
It is the third time the IEA coordinated release from the emergency stockpiles since the agency was founded in 1974. Oil was released during the 1991 Persian Gulf War, and after Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005.
The agency acted 15 days after OPEC ministers kept production quotas unchanged as Saudi Arabia didn’t find enough support from other members to boost supply amid oil prices above $100 a barrel in London.
-- Editors: Steve Geimann, Larry Liebert
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