Why Obama Shouldn’t Tap U.S. Oil Reserves
s U.S. sanctions on Iran tighten and gas prices reach record levels, it is becoming more likely that a release of oil from the U.S. Strategic Petroleum Reserve is in the works. Yet analysts aren’t convinced tapping the SPR is a good idea.
Administration officials said Friday that reserves from the SPR were taken into account when they determined that oil markets could handle the loss of Iranian oil.
Even before the tighter sanctions were announced, there was talk the administration was working with European countries on a plan to tap oil reserves in both the United States and Europe. The rumors have already pushed global oil prices down slightly, although they remain over $120 a barrel.
Still, analysts are skeptical about what impact tapping the SPR would have on prices.
They note that in the past it has been small and short lived. They also say that the reserves are intended to cover events that produce actual shortages of gasoline at U.S. service stations, like what could happen in a full-blown conflict with Iran. Reserves were not designed to bring down prices in a jittery market.
“Only physical supply interruptions merit a draw,” said Kevin Book, managing director of research at ClearView Energy Partners. Rising oil prices over the last couple of months are a sign that things with Iran could get really bad, and that “we shouldn’t be burning our safety net in our gas tanks.”