ABC News’ Mary Bruce reports:
With the demand for gas expected to rise in the upcoming summer driving season, President Obama made the surprise announcement today that his is releasing 30 million barrels from the U.S. Strategic Petroleum Reserve into the global oil markets over the next month.
The decision is “due to the major supply disruptions in Libya and other countries and the resulting tightness of the market and the effect that that is having on economic growth both here and abroad. The overriding purpose of our effort is to increase supply to counter any shortfall and meet this typical increase in oil demand over the summer. We are heading into a period in which demand for oil tends to be at its highest,” a senior administration official explained.
The White House, which will assess the situation at the end of the month, is leaving the door open to releasing more oil from the stockpile. “The U.S. stands ready to do more as and if necessary to address this issue,” the official said.
The U.S. is working with other members of the International Energy Agency, who will release an additional 30 million barrels and said that today’s decision was made in “full consultation” with the major oil producing countries.
Gas prices in the U.S. have come down in recent weeks from the $4-a-gallon peak this spring. Asked why the administration decided to release the reserves now, the official said only that “this is something that has been in the works for a while.”
Although the impending summer demand clearly has the Obama administration worried, the White House would not make any predictions about the effect that the release will have on prices at the pump.
“We’re not making predictions about market prices, which go up and down,” a senior administration official said. “This is about addressing the supply disruption and the prices will be what they are.”
This is only the second time that a president has tapped into the SPR, which was created to avert a repeat of the supply disruption caused by the 1973-1974 Arab oil embargo. The last time was after Hurricane Katrina, which caused a 38 million barrel disruption. According to the White House, over 140 million barrels have been lost since the start of the uprising in Libya.
“The U.S. maintains the Strategic Petroleum Reserve precisely for this purpose, to respond to domestic or international energy supply shortages and disruption of significant scope of duration that have a potentially damaging effect on the economy,” the official said.
The reserve is at a historically high level of 727 million barrels. The White House points out that the 30 million barrels allotted for release next month make up less than 5 percent of the total reserve.