WASHINGTON (Reuters) - The government should save its strategic oil reserves for a true supply emergency and resist the temptation to tap them now as a “quick fix” to quell rising gasoline prices, Republican Senator Lisa Murkowski said on Monday.
Releasing oil too soon from the salt caverns storing 696 million barrels of crude could have a short-term political pay-off by lowering gasoline prices but would sell the country short if tensions in Iran severely restrict world supplies later this year, Murkowski said in an interview.
“When prices increase at the pump, and politicians get concerned about the repercussions of that, they look for a quick fix,” said Murkowski, the top Republican on the Senate Energy Committee.
“If we have used up or tapped into the insurance policy, just to try to take the pressure off some of the gas prices, I think we’re going to regret that decision,” she said.
Some Democratic lawmakers have urged aggressive use of the strategic petroleum reserve, or SPR, to send a signal to oil speculators, and Treasury Secretary Timothy Geithner last week said the United States is considering a release as one way to minimize the impact of a gasoline price spike on the economy.
“We’re getting a little almost trigger-happy here with the need to turn to the SPR first,” Murkowski said.
“We all know that it doesn’t make a difference, long term,” she said.
The United Nations last week reported Iran has stepped up efforts to enrich uranium. Iran has insisted is developing nuclear power, not weapons.
The uncertainty has fueled oil prices, and gasoline prices in the United States have surged to their highest level on record for February. Analysts say average prices could rise well over $4 per gallon during the peak driving season in coming months.
International sanctions, aimed at slowing Iran’s progress towards a feared nuclear weapons capability, could remove some of Iran’s oil from the export market by mid-year, as Western sanctions push Iran’s oil consumers including Japan, China and South Africa to cut shipments, and as the European Union’s embargo takes hold.
In addition, Iran has threatened to block the Strait of Hormuz, a critical oil shipping lane.
It is possible the United States eventually will find the need to draw on its emergency reserves given concerns about Iran’s nuclear program, Murkowski said.
“I think that we are as close to that kind of a danger zone as we have seen in a long, long time,” Murkowski said,
But in the long run, the United States also needs to expand its domestic production to reduce reliance on foreign oil, she said, criticizing Democratic Senator Charles Schumer for urging the Obama administration to ask Saudi Arabia to pump more oil.
Schumer, the third-ranking Democrat in the Senate, said on Sunday that a public promise from Saudi Arabia to step up production would calm oil markets and gasoline prices.
“If we were producing more, maybe we wouldn’t need to go to Saudi Arabia and ask for an additional 2, 2.5 million barrels per day. Maybe we would be able to do it ourselves,” Murkowski said.
Murkowski said she is frustrated her home state of Alaska is held back from drilling oil and gas in protected areas and offshore.
“We haven’t been able to get the go-ahead at the federal level to access more,” she said.
Editing by Marguerita Choy