Obama urged to open U.S. oil reserve
A dredger is pulled out to sea for work on the oil spill in Grand Isle, La.
TEXT OF STORY
That of the price for a barrel of oil -- above $104 at the close in New York today. Roll that in with higher gas prices, and it explains why you've been hearing more the past few days about maybe tapping into the Strategic Petroleum Reserve, the oil stockpile the government keeps on hand.
We asked Marketplace's Alisa Roth to spend a couple of minutes explaining how the SPR's supposed to work. And what opening it up -- even just a trickle -- might mean.
Alisa Roth: The Strategic Petroleum Reserve currently holds more than 700 million barrels of oil -- that's at least two months of oil imports. The government lists various scenarios for tapping this supply. But they all basically boil down to whether it's an emergency.
Several senators and congressmen say the recent fast rise in oil and gasoline prices constitutes an emergency. But many disagree.
Andrew Lipow: That criteria has not been met.
Andrew Lipow is an oil industry consultant.
Lipow: The U.S. imports less than 1 percent of its crude oil supply from Libya. So we do not have here a supply disruption as yet.
The strategic reserve was created in the 1970s, after OPEC's oil embargo. Since then, the government has used it sparingly: the last time was in 2005, after Hurricane Katrina hit. That helped bring oil prices down by 9 percent.
Critics of releasing oil from the reserve when it's not a true emergency say it's market manipulation.
Tom Kloza is an analyst at the Oil Price Information Service. He says the government should keep open the option of using the reserve.
Tom Kloza: That would absolutely qualify as government interference in a free market, but you can't really call it a free market when you have a cartel like OPEC anyway.
This week, Treasury Secretary Timothy Geithner said the U.S. would consider using the reserve if there were a sustained severe disruption to the oil supply.
In New York, I'm Alisa Roth for Marketplace.