WASHINGTON (Reuters) - Three lawmakers on Thursday urged President Barack Obama to consider tapping America's emergency oil supply to help lower crude prices that have spiked above $100 a barrel over disruptions in Libya.
The International Energy Agency, which coordinates policy among the world's consumer nations, has said it would likely let OPEC move first to address any supply shortages. But the call by the Democratic Representatives suggests pressure is starting to build for Obama to get more involved.
The lawmakers wrote in a letter that releasing oil from the Strategic Petroleum Reserve would help prevent the kind of runaway increase in oil prices that occurred in the summer of 2008, when crude reached a record $147 a barrel and gasoline hit an all-time high of $4.11 a gallon.
"We therefore urge you to consider leveraging the SPR to respond to these supply disruptions and combat the rapid price escalations resulting from rampant speculation in the oil markets," the lawmakers said in their letter to Obama.
The letter was signed by Representatives Ed Markey, a relatively influential lawmaker who ran the House's erstwhile committee on climate change and energy independence, plus Rosa DeLauro and Peter Welch, all Democrats from Northeast states.
The lawmakers did not recommend how much oil to release, but said pulling out even "a small fraction...could have a significant impact on speculation in the marketplace and on prices."
The U.S. Department of Energy has released SPR stocks only a handful of times -- most recently when Hurricane Katrina knocked out Gulf Coast refiners in 2005. DOE has generally said it would only dip into the 727 million barrel oil caverns in the event of a severe supply disruption.
While Libya's 1.3 million barrels per day (bpd) of oil exports is a meaningful sum for the global oil market, the United States imports only about 77,000 bpd. That is equivalent to around 0.4 percent of the country's consumption. Saudi Arabia has already begun speaking to European refiners who buy most of Libya's oil.
The administration could have an impact on prices even if it said it was thinking about tapping the reserve, they said.
"Signaling your intent to consider selling oil from the SPR in the near term would send a strong signal to oil markets responding to the unrest in the Middle East," the lawmakers said.
Federal law allows the government to tap the reserve during a national energy supply shortage that raises petroleum prices and could damage the economy. The president has the power to determine such an emergency.
The lawmakers said releasing reserve oil has a proven record of driving down oil and gasoline prices.
The pointed out that when oil was released from the stockpile after Iraq's invasion of Kuwait, oil prices immediately fell by more than 33 percent.
Oil prices fell by 9 percent when the reserve was tapped in 2005 following Hurricane Katrina.
The reserve was created by Congress in the mid 1970s after the Arab oil embargo and stores emergency supplies at four sites in Texas and Louisiana.
Reporting by Tom Doggett; Editing by David Gregorio