Congressional lawmakers are calling for the Obama administration to open up the U.S. strategic petroleum reserve as Middle East instability drives up gas costs. Politicians are urging the Obama administration to open the spigot, despite a worldwide surplus of oil production capacity. United States supplies of oil and gas are also far above average seasonal levels. The administration disagrees, saying that so far the rise in gas prices has been modest and an act such as tapping the reserve could send a signal to the markets the oil supply is truly threatened. Source for this article – Why tapping U.S. strategic oil reserves will not lower gas prices by MoneyBlogNewz.
Why Congress would like to tap the oil reserve/span>
The largest oil reserve in the world is the United States strategic petroleum reserve. About 727 million barrels of oil are in there. Nationwide, the average price of a gallon of gasoline has risen 28 cents in the past 10 days. In order to stabilize oil costs and keep oil supplies from being disrupted, Senator Bingaman, D-N.M., has suggested as Senate Energy and Natural Resources Committee chairman that a major portion of the oil reserve be sold. Other politicians are saying that in addition to tempering upward pressure on gas prices, selling some of the strategic oil reserve would raise billions of dollars for deficit reduction and help fund programs to cut back United States oil consumption, such as tax breaks for electric vehicles and hybrids.
An abundance of oil in the United States/span>
As part of the increase in oil prices, the Obama administration doesn't want to sell part of the U.S. strategic reserve. This is despite the fact that part of the funding for things in the 2012 budget proposal would call for $500 million in oil the reserve to be sold. What the administration believes is that, when the United States is not at all running short on oil, it would send a panic that is false to consumers. There’s a supply of this in an oil storage facility in Oklahoma. Record inventories are in there right now. Production is expanding in North Dakota, and a new pipeline is pumping gas into the United States from Canada. United States crude oil inventories, in accordance with the United States Energy Information Administration, are at 346.4 million barrels. Inventories of gasoline are even higher. They are at 9.86 billion gallons for U.S. gasoline. You will find more than average amounts in these inventories. This is determined by the time of year.
How to fix oil costs/span>
The fear that is keeping gasoline prices high would be validated by the Obama administration tapping into oil reserves, says oil industry analysts. Those who oppose tapping the reserve believe that instead of an oil supply shortage, a shortage in surplus production capacity is the real problem. The surplus oil production capacity will likely be reduced if the Middle East turmoil continues. If surplus oil production capacity in the future were significantly diminished, or simply even erased, the real oil price nightmare would start. Fixing the issue temporarily with the oil reserve won't do anything. Instead, the capacity to make more oil will help the oil markets.
Citations/span>
New York Times
nytimes.com/2011/03/04/business/energy-environment/04oil.html?_r=1
Foreign Policy
oilandglory.foreignpolicy.com/posts/2011/03/04/the_weekly_wrap_march_4_2011
UPI
upi.com/Business_News/2011/03/03/Crude-oil-supplies-fall-slightly/UPI-22221299189942/
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