Gulf News reported that a motorist pumps gas at a gas station in New York. If US gasoline prices currently at about USD 3.80 a gallon keep rising ahead of the November 6th 2012 election, Mr Obama could face increasing pressure to use the reserves to ease prices.
Mr Barack Obama president of US faced stiff resistance to the possibility of releasing emergency oil reserves to quell rising energy prices with Asian allies and the head of the West’s energy agency rejecting any need for action now.
The White House was “dusting off plans for potentially tapping the Strategic Petroleum Reserve, Ms Maria van der Hoeven executive director of the International Energy Agency was blunt in her assessment there is no reason for a release.
She said that the IEA bases our actions on data and reality. The market is sufficiently supplied. She had not discussed a potential release with members of the Paris based IEA which is charged with coordinating use of consumer nations’ strategic inventories. But if US gasoline prices, currently at about USD 3.80 a gallon, keep rising ahead of the November 6 election, Mr Obama could face increasing pressure to use the SPR to ease prices.
Mr Kevin Massy of the Energy Security Initiative at the Brookings Institution said that Republicans would likely blame the oil rise on Mr Obama’s delaying the Canada to Texas Keystone XL pipeline and putting restrictions on offshore drilling after the BP oil spill. That could push the administration to at least increase the frequency of references to an SPR release.
Prices for Brent crude tumbled as much as 2% to below USD 113 per barrel on news the United States was considering a release from reserves, then erased some of those losses following van der Hoeven’s comments.
Key members of the IEA offered varied views, reflecting a divide between those who have tended to favour a more liberal use of the world’s government held stocks as a means to influence prices and aid economic growth and those who believe they should be strictly reserved for supply emergencies.
A European Union embargo on Iranian crude oil took full effect on July 1st 2012 in a joint effort with the United States to force Tehran to curb nuclear activities that the Western powers say pose a military threat, despite Iranian denials.
Ms Van der Hoeven noted that total US oil reserves exceeded the mandated 90 day level required by the IEA and that Washington was not prohibited from acting alone. They are American supplies. They can be used for domestic reasons and for the solution of domestic problems. It’s up to them.
Source - Gulf News
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