Today’s decision to use our Strategic Petroleum Reserve underscores the need to reduce our dependence on foreign oil by unleashing our own energy resources.  America has the most plentiful energy resources in the world, and it’s time we had a productive, positive energy plan.  Removing federal government barriers to production, from Alaska to the Gulf to Virginia, would increase our energy security, lower our gasoline and diesel prices and keep our money in the United States. 

Obama takes flak for using oil reserves as stimulus

Reuters

By Ayesha Rascoe and Timothy Gardner

June 23, 2011

(Reuters) – President Barack Obama took withering fire from the oil industry and Republicans for agreeing to release the nation’s emergency oil supplies, a decision that senior officials said was prompted by the need to prop up the ailing economy.

Critics blasted the release of 30 million barrels of oil — half of a global injection coordinated by the International Energy Agency — as an ill-timed misuse of reserves at a time when U.S. supplies are relatively high, despite the loss of Libya’s exports for the past three months.

Some OPEC officials went further, calling it a political ploy that ignored Saudi Arabia’s promise to step up production and the fact that oil prices had already fallen sharply.

A senior administration official said the decision came after careful analysis of global oil markets — including expectations that supplies will tighten this summer — and months of discussions with major oil producers and consumers.

But the move fueled questions about the timing and catalyst for releasing the stocks, which in the past have been used almost exclusively to address abrupt disruptions like natural disasters.

“The president has been deeply concerned about the impact the disruption of oil production and exports from Libya and other countries in the Middle East has had on energy supplies globally, the tightness that that’s created in the market, the effect that tightness has on global economic growth at home and abroad,” a senior administration official told reporters.

DRIVING SEASON LOOMS

The Obama administration was also concerned about tight markets ahead of peak demand in the summer, when many Americans take to the roads for vacations. The jump in gasoline prices earlier this year was hurting Obama’s support as the White House was gearing up for its re-election campaign.

“The cascade of bad economic news is poison for a president running for re-election,” said Larry Sabato, political science professor at University of Virginia.

“But politics is about smoke and mirrors. This now allows the Obama administration to claim credit for the fall in oil prices,” Sabato said.

Others said the move was a shot across the bow for the speculators that Obama has blamed for inflating prices, and for OPEC members who have resisted moves to pump more oil.

“We would suggest that today’s action represents the first genuine, offensive use of the OECD’s ‘defensive oil weapon’ to send an unforgettable message to OPEC and also to noncommercial players in the crude markets,” said Kevin Book, an analyst at ClearView Energy Partners in Washington.

“I’M NOT SURE WE NEED MORE OIL”

The U.S. oil release is designed to help fill a gap in supply caused when political upheaval in Libya and Yemen choked off supplies of light, sweet crude, which initially sent oil prices higher.

But the IEA’s 60 million-barrel release comes as U.S. oil prices have been on the decline since late April, falling nearly 20 percent since their U.S. peak at $113 a barrel. Thursday’s announcement drove oil prices down almost 5 percent to below $91 per barrel.

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