Schumer: Release Oil Reserves To Cut Prices
U.S. Senator Charles E. Schumer has called on President Barack Obama to deploy the Department of Energy’s Strategic Petroleum Reserve in order to clamp down on skyrocketing gas prices in New York and around the country. In the wake of the recent unrest in the Middle East, which has affected the supply from Organization of the Petroleum Eporting Countries (OPEC) member nations, such as Libya, in addition to disruptions at critical transportation choke points like the Suez Canal in Egypt, the price of oil has climbed to new heights. Last Friday the weekly U.S. average price per gallon of oil climbed to $3.51, a 33 cent jump from two weeks ago and the second largest price increase in a two-week period in U.S. history, and up 78 cents from a year ago, the highest price posted since September 2008. In the wake of these surging oil prices, Schumer, in a letter to the president, urged the administration to tap the Strategic Petroleum Reserve in order to address the supply disruption and off-set the rising cost of gasoline to keep America’s recovery going strong.
“With oil prices surging day after day, Americans are being squeezed at the pump and paying more for everything from groceries to plane tickets,” said Schumer. “The unrest in Libya and the Middle East has disrupted supply and triggered rapid price hikes that are gobbling up an ever bigger share of consumer spending. Tapping the Strategic Oil Reserve would not only provide much needed relief to New Yorkers and Americans across the country – it would also help ensure that our economy doesn’t slip back into a decline. Even a commitment by the administration that it stands ready to tap the reserve could help calm jittery markets.”
Schumer’s spokesperson added that the Strategic Petroleum Reserve would be a much needed shot in the arm for our economy. Established by the U.S. government in the wake of the 1970s Arab oil embargo, the reserve has been used since then to deal with crises that disrupt oil production. It was last used after Hurricanes Gustav and Ike in 2008, and was also tapped in 2005 after Hurricane Katrina. With 727 million barrels of oil, the reserve has enough capacity to sustain the country on its own for a month. In accordance with the Energy Policy and Conservation Act, President Obama has clear statutory authority to access these reserves during a “severe energy supply interruption” like the situation in Libya. If accessed, the 4.4 billion barrels could be drawn and entered into markets within two weeks.
Tapping the reserve would not only help keep gas prices down – it would also help ensure that the United States economy remains on the path to a full recovery. Higher oil prices not only increase costs at the pump, they also drive up home heating prices, as well as costs for consumer goods like groceries that require oil to be transported.
Economists worry that higher oil prices could stall the U.S. economic recovery.