Gas Costs Not Likely Influenced By Using U.S. Oil Reserve
Middle East unrest has given lawmakers the idea that tapping into U.S. oil reserves will stem increasing gas costs. The call to tap reserves is being made even though the world has an excess of oil production capacity and United States fuel inventories are full. The administration is advising Congress not to panic, and industry analysts say tapping the petroleum reserve may feed the fear that is driving up oil and gasoline prices.
Why Congress wants to tap the oil reserve
About 727 million barrels of oil are found in the U.S. strategic petroleum reserve. Nationwide, the average price of a gallon of gas has risen 28 cents in the past 10 days. Senator Bingaman, D-N.M., chairman of the U.S. Senate Energy and Natural Resources Committee, implored the administration to sell a major portion of the strategic oil reserve to stabilize oil prices and prevent a disruption in oil supplies. Other politicians suggest that not only would gas prices be helped by this sell, however billions could possibly be raised to help work on the deficit and to help give tax breaks for electric cars and hybrids reducing oil consumption.
United States not running low on oil
The Obama administration objects to tapping the United States strategic petroleum reserve as a reaction to the current spike in gasoline and oil prices, even though its 2012 budget proposal calls for selling $500 million worth of oil from the reserve to fund certain programs. Consumers would start to panic if the United States government started to sell part of the oil reserve, the administration believes. They say that the U.S. has plenty of oil nevertheless. A major oil storage facility in Oklahoma that supplies the interior U.S. has record inventories. Production is expanding in North Dakota, and a new pipeline is pumping gas to the United States from Canada. The United States Energy Information Administration reports that there is plenty of oil in the crude oil inventories. It has reached 346.4 million barrels. Inventories of gasoline are even higher. They’re at 9.86 billion gallons for U.S. gasoline. For this time of year, the levels of the inventories are both higher than normal.
Fixing oil costs that rise and drop
The Obama administration is making a good decision, oil industry analysts suggest. It would make people driving up the gasoline prices more fearful while doing nothing else to oil and gasoline prices. The supply of oil isn’t the problem, many suggest. They think a shortage of surplice production capacity is the problem everyone is facing. Continuing issues in the Middle East will be the issue. The surplus oil production will stop. If surplus oil production capacity in the future were significantly diminished, or maybe even erased, the real oil price nightmare would begin. Adding the capacity to produce more oil rather than a temporary infusion from the strategic oil reserve will put the international oil markets at ease.
New York Times