WASHINGTON - When Middle East unrest disrupted oil supplies and began to push oil prices higher, Rep. Ed Markey (D-Mass.) and other House lawmakers first raised the option of using the Strategic Petroleum Reserve to prevent price spikes and protect consumers. With continued strife expanding and escalating in key oil producing countries, Rep. Markey today expanded his push to garner support in the House to release oil from the reserve to calm prices, circulating a letter amongst his fellow House colleagues to send to President Obama. Reps. Peter Welch (D-Vt.) and Rosa DeLauro (D-Conn.) joined Rep. Markey in the effort.
The full letter is pasted below this release.
This weekend, White House Chief of Staff Bill Daley said that deploying the reserve is an option the Obama administration is considering using to protect the burgeoning U.S. economic recovery.
“While the current supply disruptions highlight the need to strengthen our energy independence over the long-term by developing alternatives to oil, we encourage you to consider utilizing the Strategic Petroleum Reserve now -- the only tool we possess which can counter supply disruptions and combat crippling price spikes in the short term," writes Rep. Markey in the letter to the president. Rep. Markey is the top Democrat on the Natural Resources Committee. “We therefore urge you to consider leveraging the SPR to respond to supply disruptions and combat the rapid price escalations resulting from rampant fear and speculation in the oil markets."
The letter also raises the possibility of conducting a “swap" of oil within the reserve -- releasing light crude oil and replacing at a later time with so-called refined product, such as gasoline or diesel fuel. Libya supplies of light crude have been disrupted, and lighter crude is typically used to create gasoline and other transportation fuels. The letter explains that replacing a small percentage of the oil in the reserve with refined product would put downward pressure on prices in the short term and could also protect more adequately against future disruptions in domestic refining capacity or supply disruptions of heavy crude from countries like Venezuela.
Reps. Markey, Welch and DeLauro were the first members to call on President Obama to consider using the reserve, sending him a letter on Feb. 24, 2011. The letter can be found HERE. The Honorable Barack Obama
President
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear President Obama:
This month, oil prices have spiked over $106 per barrel on the New York Mercantile Exchange as unrest in the Mideast has intensified. This price spike is now directly impacting American consumers, with gasoline prices rising 34 cents in just 2 weeks. Markets are incorporating the increased risk of a prolonged civil war in Libya disrupting 2 percent of global supply for a sustained period as well as spreading regional tension bringing more supplies into question. While the current supply disruptions highlight the need to strengthen our energy independence over the long-term by developing alternatives to oil, we encourage you to consider utilizing the Strategic Petroleum Reserve (SPR) now -- the only tool we possess which can counter supply disruptions and combat crippling price spikes in the short term.
While Saudi Arabia and other OPEC members with available spare production capacity have pledged to raise production for lost Libyan crude, they also profit from oil price spikes and therefore have little incentive to quickly respond with the increased supply needed to calm markets. 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 Strate
