The President, and the U.S., Sit on a Huge Pool of Oil; Should It Be Used?
With oil prices nearing $40 a barrel, and the economy stumbling, many are calling on President Bush to tap into the massive oil supplies known as the Strategic Petroleum Reserve.
The reserve is a nearly 600-million-barrel, 53-day supply of crude oil held in Texas and Louisiana, and designed to protect the country in case of a shortage big enough to threaten the national safety of the economy.
It's up to the president to determine when it should be used.
It took a national energy crisis — the Arab oil embargo of 1973 — to create the reserve in the first place. And some see a crisis in the making now.
"If ever there was a rainy day in the oil market and the economy, this is it," said economist Donald Straszheim of Straszheim Global Advisers in Santa Monica, Calif.
Release Could Drop Oil Prices Those who favor tapping into the reserve right away say it would calm fears and lower prices.
When the first President Bush authorized the use of strategic reserves on the first day of the 1991 Gulf War, for instance, the price of crude oil plunged from $31 to $21 a barrel in a single day — the largest one-day drop ever. He was later criticized for acting too late to keep the country out of recession.
When President Clinton tapped the reserve in September 2000 to relieve high prices and temporary shortages, the price of crude fell $3.50 in a week. He too was later criticized, in this case for using the reserves for political reasons.
The steep rise in crude oil prices over recent months, fueled by talk of war with Iraq, as well as the ongoing work strike in Venezuela and unusually cold winter weather, has had a real impact on the economy and consumers, driving up prices at gas pumps and for home heating oil.
But for now this President Bush is sitting tight. Energy Secretary Spencer Abraham last week told ABCNEWS, and the Senate, that strategic reserves are for emergencies only. "Obviously we are prepared to act. But that situation has not yet in our judgment arrived," said Abraham.
As one analyst put it, you can't afford to act on a rainy day when there may be a full-fledged storm coming — a war with Iraq. But with oil prices approaching $40 a barrel and oil supplies at a 28-year-low, the pressure on the president is intensifying.
Source: ABCNEWS
Last Updated: Mar 4, 2003