As oil prices rise, Obama feels political pain at the gas pump

Skyrocketing oil prices are creating new political risks for President Obama, who is considering tapping the Strategic Petroleum Reserve to relieve drivers suffering at the pump. 

Republicans, sensing a winning issue, pounced Monday by announcing new hearings on gas prices and warning that tapping the reserves would provide only temporary help to consumers struggling with high gas prices. 

ADVERTISEMENT
Policies backed by the administration and congressional Democrats “have cost jobs, stunted economic growth and stuck American families with higher energy bills,” Rep. Tom Price (Ga.), the chairman of the House GOP Policy Committee, said in a statement Monday. 

“The rise in gas prices is not merely the consequence of some temporary disruption and will therefore not be solved by some short-term fix,” he said. “It is a problem that requires an all-of-the-above energy strategy and one that should begin immediately.”

Rep. Doc Hastings (R-Wash.), the chairman of the House Natural Resources Committee, announced his panel would hold hearings to examine how “to develop our own American energy resources and also what has or hasn’t been done since President Obama took office.”

The high gas and oil prices, which rose more last week than they have in two years, are resonating loudly within a White House that recognizes how quickly political fortunes can change when a gallon of gas nears $4. The national average price of a gallon of gasoline was $3.51 on Monday, according to AAA. A year ago, it was $2.75.

The president is “very cognizant of the fact that Americans are experiencing a sharp rise in prices at the gas pump, and that affects them and their family budgets,” White House press secretary Jay Carney said Monday. 

In 2008, Obama appeared on his way to coasting to the White House, having defeated Hillary Clinton, when he was nearly knocked off balance by a jump in gas prices. 

Republicans built political momentum by embracing the slogan “Drill, baby, drill” while criticizing Obama and Democrats for opposing oil drilling in Alaska and the Gulf of Mexico. Obama saw his own poll numbers slide as the GOP’s ticket of Sen. John McCain (Ariz.) and Sarah Palin sensed a winning formula. 

The fight over energy shook Obama’s campaign team, and led the president to shift his position and embrace tapping the Strategic Petroleum Reserve, a move opposed at the time by then-President George W. Bush.  

The shift was striking. Just a month earlier, Obama had said that while he supported a congressional resolution that would halt filling the reserve, he thought the reserve as a whole “has to be reserved for a genuine emergency.”

The GOP’s momentum that fall plummeted along with the U.S. economy, which fell into a brutal recession as the financial crisis led to a tumble in the markets. Demand for petroleum fell as hundreds of thousands of workers lost their jobs and companies shuttered their doors. 

Now there’s a turnaround. The U.S. economy increasingly shows signs it is picking up, the latest evidence being a strong jobs report on Friday that showed unemployment falling below 9 percent. 

The White House hopes to use an economic recovery to present its case to voters next year that Obama deserves another four years in office. But the rising economy, coupled with turmoil in the Middle East, has increased demand for oil, which jumped to nearly $107 per barrel on Monday. 

White House Chief of Staff Bill Daley’s suggestion Sunday that the strategic reserve could be tapped highlighted the concerns for the administration, which tried to throw some cold water on the idea Monday. 

Carney insisted he was not trying to walk back Daley’s comments, and said the issue remained on the table. But Carney said opening the reserve would be based on a “major disruption” in oil production, not just its price.

“There are a number of factors that go into it, and it is not price-based alone,” said Carney, who cautioned at looking toward a “price threshold.” 

“The issue here is disruption. Is there a major disruption in the flow of oil? That’s obviously a factor,” he said. 

He also said the pain many Americans are feeling is part of the White House’s consideration, as is the larger concern that the spike in prices could derail the fragile economic recovery. The payroll tax break included as part of a deal with Senate Republicans in December that extended the Bush-era tax breaks was supposed to serve as a stimulus for the economy. But many people are using the gains in their check to pay for higher fuel prices, taking a chunk out of the stimulus’s impact.

Democratic lawmakers, including Sen. Jeff Bingaman (N.M.), chairman of the Senate Energy and National Resources Committee, have called for Obama to consider using oil from the reserve. 

Carney on Monday insisted that Obama’s decision wouldn’t be based on politics. 

“I don’t think this is about politics,” Carney said. “I think it’s about the impact on American families and their budgets, and I think it’s about the impact on the economy ... and then broadly, the global system of oil supply and the potential for a disruption.

“So all of those things are things that we’re looking at as we consider our options.”

Carney also sought to defend the White House’s position on domestic drilling by noting that since the new regulations were imposed after the disaster in the Gulf last year, the Interior Department has approved 37 permits for shallow-water projects. And last week the department, which has issued a suite of beefed-up drilling safety mandates, approved the first permit for the type of deepwater drilling project that was halted after last year’s spill.

Ben Geman and Andrew Restuccia contributed to this report.