Air industry calls for U.S. crude reserve release
WASHINGTON, July 23 (Reuters) - The U.S. government should tap the national petroleum reserve to relieve ailing airlines that have been stung by soaring oil prices, the industry's leading trade group told lawmakers on Wednesday.
"History shows us that even a temporary increase in supply will immediately lower oil prices," James May, president and chief executive of the Air Transport Association, told the House of Representatives Select Committee on Energy Independence and Global Warming.
Three major U.S. airlines reported second-quarter losses on Tuesday of more than $3.3 billion, blaming skyrocketing fuel costs.
May testified as the House is expected to vote Thursday on legislation to release millions of barrels of light sweet crude from the Strategic Petroleum Reserve and swap it with heavy sour crude in an effort to calm the market.
The government has tapped the SPR before to control prices, notably after Hurricane Katrina in 2005 shut oil output from the Gulf of Mexico.
May said the U.S. economy is now suffering more from high oil prices than it did during Katrina. Oil was trading at about $127 a barrel on Wednesday after hitting $147 per barrel earlier in the month. It cost about $70 a barrel in late 2005.
Airlines have also been lobbying for Congress to crack down on speculation on oil markets which they blame for pushing up prices.
Oil analyst Phil Verleger has said a swap of sweet for sour crude could quickly cut oil prices because a broad range of oil refineries are thirsty for the high-quality crude, while global crude producers are having a hard time selling heavy crude.
Others have said a release would be only a temporary fix and could slow the momentum for alternative fuels like second-generation biofuels made from substances other than corn.
So far, the White House has refused requests to tap the emergency stockpile, saying the reserve's 706 million barrels of oil are intended only for severe supply disruptions.
The stockpile, which was created by Congress in the mid-1970s after the Arab oil embargo, holds oil at four underground storage sites in Texas and Louisiana. (Reporting by Timothy Gardner and Ayesha Rascoe, editing by Matthew Lewis)
