* White House gathers information for potential SPR release
* One idea involves long term sale as US drills more oil
* Gasoline tax holiday could give drivers relief
By Timothy Gardner
WASHINGTON, Sept 6 Obama administration
officials met with a handful of oil market experts on Thursday
as the White House considers the merits of another release of
emergency oil reserves -- potentially one several times larger
than the last.
The meeting, originally scheduled for August but delayed by
summer vacations, did not center entirely on the Strategic
Petroleum Reserve, according to nongovernment sources who
attended the meeting. But it was still read by some as a sign
that President Barack Obama is intent on pressing ahead with an
unprecedented second tapping of government oil supplies.
Earlier in the day UK-based oil consultancy Petroleum Policy
Intelligence issued a report saying that an injection of SPR
supplies could occur "within days," but two people who attended
the meeting said it would not happen that soon.
"They are still in information collection mode," said one.
But with benchmark Brent oil futures pushing back above $110
a barrel and threatening to restrain the economies of the United
States and Western Europe, it has been clear for weeks that the
White House is looking to the SPR for relief.
Reuters first reported last month that the administration
was "dusting off" plans that had been shelved in the spring,
when prices fell. At that time a source familiar with the talks
said officials would be looking closely at whether gasoline
prices fell after Labor Day, which was on Monday.
For the moment they remain stubbornly high, after last
week's Hurricane Isaac shut down a swath of Gulf Coast
refineries and a deadly blast in Venezuela temporarily crippled
production in part of the world's second-biggest refinery.
White House officials last held a meeting with outside
energy experts in July to discuss the overall energy market
issues including China's thirst for oil. Thursday's meeting,
which included mid-level officials from the National Security
Council, the Treasury and the Department of Defense, was about
gathering information and was not expected to result in any
The White House had no immediate comment on Thursday's
GO BIG OR ...?
While sources say a wide range of ideas on how to tackle oil
prices are on the table, one proposal that has been put forward
to the administration is to open the door to a much larger, more
prolonged release -- perhaps 100 million to 180 million barrels.
Last year, as civil war in Libya cut the country's oil
exports, the Obama administration coordinated with the
International Energy Agency to sell 60 million barrels of oil, a
move that lowered oil prices but only for a few weeks.
It is unclear whether Washington can again marshal global
backing for a measure. It has secured support from the UK and
France, media have reported, but officials in Germany, Italy and
Japan say they oppose another release.
A much more dramatic measure could put a bigger dent in oil
prices, easing gasoline costs just before the U.S. presidential
election but also likely sparking fierce attacks from
Republicans who have long resisted using the SPR for anything
other than a supply emergency, like Hurricane Katrina.
Republicans could also be expected to accuse Obama of
attempting to use the SPR for his own political benefit as he
tries to convince voters weary of high unemployment and a weak
economy to give him a second term on Nov. 6.
Domestic considerations aside, the administration is
nervous about the potential impact on oil markets and the
economy in the event that Israel attacks Iran, whether it comes
before the Nov. 6 election or in the months after, said another
energy expert by cellphone before he entered Thursday's meeting.
Officials also fear that high prices are blunting the impact
of new sanctions on Iran, designed to cut funding of the
country's nuclear program which Tehran says is purely for
SPR DEBATE; GASOLINE TAXES
Using the SPR to aid policy has been a topic of discussion
with energy experts going back at least to the administration of
George W. Bush.
It was unclear just how seriously White House officials were
considering such a large sale, which would likely last months.
While angering Republicans, such a measure could also rile Saudi
Arabia, which has been pumping at the highest rates in years to
replace barrels lost by Western sanctions on Iran.
However some say the idea may have merit. U.S. net oil
imports have fallen this year to below 8 million barrels a day,
down more than a third from 2005, thanks to an unexpected boom
in domestic production -- meaning Washington no longer needs to
hold quite as much oil in emergency reserve.
The stockpile currently holds about 696 million barrels,
which in theory could be reduced to 500 million barrels in a
couple of years, according to energy consultant Philip Verleger,
who was an energy advisor to President Jimmy Carter.
"What's clear right now is there's a shortage of gasoline
and that oil product markets are tight," said Verleger, who was
not attending Thursday's meeting.
Other ideas beyond tapping reserves would also likely be
discussed, one expert who attended the meeting said before the
One would be to give drivers a holiday from the federal fuel
taxes, which push gasoline dramatically lower for a while. In
2008 Senator John McCain, who was then running against Barack
Obama for the presidency, suggested a suspension of the federal
gasoline tax for the summer months, but the idea faded.