Obama ready to tap US SPR oil supplies if necessary

11 March 2011 19:32  [Source: ICIS news]

WASHINGTON (ICIS)--President Barack Obama on Friday said the US government would tap into its strategic petroleum reserve (SPR) if necessary to maintain adequate oil supplies and to offset retail gasoline prices if they climb too high.

In a White House press conference, Obama said that his administration was coordinating with allies about recent increases in the global price of oil, “and should the situation demand it, we are prepared to tap into the strategic petroleum reserve”.

The SPR is a series of underground storage caverns in which the federal government has over time deposited some 727m bbl of crude oil.  The reserve was designed to provide oil when there are severe disruptions in global supply.

The US consumes about 15m bbl of crude daily, with about 60% of that from foreign sources.

“We are confident of our ability to fill any potential gaps in our oil supply,” Obama said, but he declined to say what oil price level or US retail gasoline price might trigger a decision to tap into the SPR.

“What I want to communicate to the market,” Obama said, “is that we will do what we need to do, in consultation with our allies, to make sure oil supplies remain stable and economic growth can continue.”

US retail gasoline prices have topped $3.50/gal across much of the country, with some regions already seeing $4/gal pricing. In a recent forecast, the US Energy Information Administration (EIA) said that gasoline prices could top $4/gal nationwide within months as the US summertime peak driving demand approaches.

“We are going to do everything we can to stabilise the market,” Obama added.

“If we see significant disruptions or shifts in the market that are so disconcerting to people that we think an SPR release might be appropriate, we will take that step,” he added.

He said that his administration has access to SPR resources “all tee-ed up”, meaning that bringing some of those reserves into the marketplace could be done relatively quickly in a matter of a few days.

Obama also said that the administration was monitoring US fuels markets against “any possible manipulation in oil pricing, and we are monitoring for price gouging”.

“The good news is that the global community can manage crises like this,” Obama added.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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