President Obama considers opening emergency oil reserves
The sun rises over an oil refinery.
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STEVE CHIOTAKIS: Oil's trading above $106 a barrel today -- the byproduct of heavy fighting and chaos on the streets of Libya. A place that could erupt into a full-fledged civil war. That sort of news could send oil prices even higher.
Here at home, gas prices have topped $3.50 a gallon. That's 33 cents more than just two weeks ago. So there are calls for the White House to do something. Chief of Staff Bill Daley told NBC's 'Meet the Press' yesterday they're considering one option -- tapping into the nation's strategic oil reserve.
But will that really help?
Marketplace's Gregory Warner is with us now to talk about it. Good morning Gregory.
GREGORY WARNER: Good morning.
CHIOTAKIS: So If they tapped it what difference would it make to the pump?
WARNER: Almost none. None at all, actually. The amount that Bill Daley talked about hypothetically releasing is just a fraction of the amount of oil that's traded on the world market every day. The reserve really exists in case the oil supply is significantly disrupted -- even with the situation in Libya there hasn't been that disruption, yet. So because there is no supply loss to make up tapping the Reserve would not mean cheaper gas.
CHIOTAKIS: So, if the move won't lower prices -- what would it do?
WARNER: It's interesting. I talked to Tom Kloza, chief oil analyst at Oil Price Information Service. He said that tapping into the reserve would really be a way for the White House to -- as he called it -- spank the speculators, to spook the financial funds that with each new Middle Eastern headline keep betting up the price of oil.
TOM KLOZA: You know at least it can let everyone in the space of trading futures know that there is some risk in just betting on a higher price for oil. You just can't keep buying up every more expensive crude oil futures without some fear that something could happen to send the market asunder.
Right now here's no reason for anyone on wall street to bet on lower oil prices. Tapping the reserve? Gives them a reason.
CHIOTAKIS: Marketplace's Gregory Warner, reporting for us this morning. Gregory, thanks.
WARNER: Thanks Steve.