House Dems urge Obama to consider tapping oil reserves

A trio of House Democrats is pressing President Obama to consider releasing oil from the nation’s 727 million-barrel Strategic Petroleum Reserve in response to price spikes prompted by the turmoil in Libya, which has disrupted production there. 

Oil prices on Thursday again surpassed $100 per barrel, hitting $103 in NYMEX futures trading before falling back, the highest prices since October of 2008.

“While the OPEC nations with available spare production capacity could easily turn on the spigot to more than offset any disruption in Libyan supply, they also profit from oil price spikes and therefore have little incentive to quickly respond with the increased supply needed to calm markets,” states a Feb. 24 letter to Obama from Reps. Edward Markey (D-Mass.), Rosa DeLauro (D-Conn.) and Peter Welch (D-Vt.).

The letter adds:

“However, one tool that the United States has at its disposal to protect against the threat of supply disruptions and related speculation in the oil markets is the Strategic Petroleum Reserve (SPR). As we approach the summer driving season, we must carefully consider all immediate options in order to prevent the runaway increase in prices that we saw in the summer of 2008. We therefore urge you to consider leveraging the SPR to respond to these supply disruptions and combat the rapid price escalations resulting from rampant speculation in the oil markets.”

The letter states that releasing even a small fraction of the reserve’s oil could have a “significant impact on speculation in the marketplace and on prices.”

The 727 million-barrel reserve is located in salt caverns along the Gulf of Mexico.

Oil prices soared to records of $145 per barrel in the summer of 2008, and average gasoline prices reached records above $4.11 per gallon in July of that year. Gasoline prices have climbed of late and currently average $3.23 per gallon, according to AAA.