Tap oil reserve to pop speculative bubble: lawmakers

WASHINGTON Fri Mar 16, 2012 1:03pm EDT

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WASHINGTON (Reuters) - A group of Democratic lawmakers in the House of Representatives is again urging President Barack Obama to aggressively use the threat of releasing oil from emergency reserves to rain on speculators driving up oil prices.

The three lawmakers are gathering signatures from others in Congress for a letter to Obama to press him to wield the 696 million barrels of oil that the government stores in salt caverns as a weapon against "rapid price escalations resulting from speculation in the oil markets."

Reuters reported on Thursday that Britain is poised to cooperate with the United States on a release of strategic oil stocks that is expected within months, citing two British sources.

Brent crude oil prices immediately dropped $3 per barrel after the initial report, but rebounded after the White House said no deal had been reached on a release of reserves.

That showed how sensitive oil markets would be to a release of oil, Edward Markey, Rosa DeLauro and Peter Welch said in the letter, reiterating calls to Obama for an "aggressive strategy" for releasing oil from the strategic petroleum reserve.

Gasoline prices in the United States are unusually high for this time of year, hurting consumer confidence heading to the U.S. elections in November.

Consumer prices rose the most in 10 months in February as the cost of gasoline spiked, according to government data on Friday, but there was little sign that underlying inflation pressures were building up.

"As we approach the summer driving season, we believe that you must consider all immediate options in order to prevent a runaway increase in prices," the lawmakers said, citing the SPR as the only short-term tool in the arsenal for combating high gasoline prices.

"Releasing even a small fraction of that oil could again have a significant impact on speculation in the marketplace and on prices. It would remind the markets that the United States is ready to employ an aggressive and effective SPR draw down policy if needed," the lawmakers said.

They expect to deliver the letter to the president in the next few days.

Republicans and some Democrats have argued the SPR should be used only in cases of dire supply emergencies to prevent the kind of line-ups for gasoline seen during the oil crisis of the 1970s.

Republicans have used high gasoline prices as an opportunity to criticize Obama for his energy policies and to push for expanded domestic oil drilling and the Keystone XL oil pipeline from Canada.

Democrats have increasingly blamed speculation for artificially inflating oil prices and have pressed regulators to clamp down.

(Editing by Russell Blinch and Bob Burgdorfer)

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Comments (10)
Susanbsbi wrote:
Speculation is how the 1& make their money. If we reduce our supply do you really thing that is going to drop the price of gas. You all forget that the big oil companies want their profits, they are greedy and the congress [GOP} keeps letting them have all those tax credits

Mar 16, 2012 12:54pm EDT  --  Report as abuse
texoman wrote:
Why don’t we just do the right thing and stop the speculation! Surely our elected officials could find the right words to put in a law that would protect us from this practice.

Mar 16, 2012 12:57pm EDT  --  Report as abuse
andy_txn wrote:
Koch bros would not like that speculation killing release of oil. They could lose $millions Watch for reps backpedaling on this when Koch bros put a gun to their collective heads.

Mar 16, 2012 12:58pm EDT  --  Report as abuse
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