Gas prices have more than doubled under President Obama, a feat unmatched even by Jimmy Carter. Understandably worried about the upcoming election, some congressional Democrats and at least one former administration official have been floating the idea that the president should release oil from the U.S. Strategic Petroleum Reserve as a way to lower prices.
Bunk.
Any price reduction caused by a withdrawal of oil from the reserve will be temporary. According to the U.S. Energy Information Agency, U.S. oil consumption was about 18.8 million barrels per day in 2009, the last year for which figures are available. The reserve inventory currently stands at just under 700 million barrels, representing just 39 days of U.S. consumption.
Last year, Obama released 30 million barrels of oil from the Strategic Petroleum Reserve—the largest withdrawal ever—as part of a 60 million barrel release coordinated by the International Energy Agency. This massive release, in response to supply disruptions in Libya and other countries during the “Arab Spring” revolts, flooded the market last summer, but by January prices were on their way back up again.
Never before has a president released oil from the Strategic Petroleum Reserve without having replaced previous withdrawals. But, already carrying a $1.3 trillion deficit, Obama has not been able to replace last year’s drawdown. To withdraw from the reserve two years in a row would be unprecedented; moreover, further reduction of our strategic reserve would increase the risk of a serious shortage in the event of a real emergency.
This is far from the only problem with using the Strategic Petroleum Reserve as a campaign tool. According to the law, withdrawals from the reserve “may not be made unless … required by a severe energy supply interruption.”
Only three times has the U.S. tapped the Strategic Petroleum Reserve: during Desert Storm in 1990-91, when the U.S. embargoed Iraqi oil; 2005 when refineries in the Gulf were shut down by Hurricane Katrina; and during last year’s “Arab Spring,” mentioned above.
When his predecessor, George W. Bush, released oil in the wake
of Katrina, Obama objected, saying that “we shouldn’t be tapping the reserve to provide a small, short-term decrease in gas prices.” He added that “the strategic oil reserve … has to be reserved for a genuine emergency.”
No such emergency exists today. Misusing the Strategic Petroleum Reserve in this way would only kick the problem down the road, until after the election. Abusing the law in this way would only compound the perception that President Obama is toying with our energy security for partisan political gain.
There is a real solution: If President Obama wants a long-term reduction in gas prices, rather than an election-year gimmick, he must consider not further depleting our reserves, but increasing output.
As mentioned in a previous column, by rescinding leases and imposing a moratorium on offshore drilling, the Obama administration reduced oil production on federal lands in 2011. According to EIA, crude oil production on federal lands declined by about 600 trillion btu, from 4.3 to 3.7 quadrillion btu. At 5.8 million btu per barrel, that works out to a loss of more than 100 million barrels—more than three times the amount of oil released in last year’s record SPR drawdown.
By restoring onshore and offshore leases shut down by the Obama administration, the president can increase the supply of oil on the market—not just temporarily, but long-term—without further depleting our strategic reserves, and at no cost to taxpayers.
